Senators are proposing a tax exemption for capital gains on cryptocurrencies for upcoming new legislation

Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) are proposing a tax exemption for capital gains on cryptocurrencies up to a specific amount as part of upcoming legislation to regulate cryptocurrencies.

Capital gains tax break up

In an interview, Lummis remarked, “We came up with a number of $600 to start with.”

Unlike traditional asset classes such as equities and bonds, both senators feel that crypto should be given a capital gains tax break up to a specific amount, allowing for greater ease of use.

“Assume a child owns bitcoin in a game, and you need a de minimis figure so the child does not have to file taxes since he has $40 in cryptocurrency.”

According to Gillibrand, blockchain technology is establishing a platform for a variety of uses, including community organizing, art investing, and allowing NFTs to be traded and used as a valuable digital commodity.

She claims that the technology must be usable for its intended purpose and that crypto firms aren’t attempting to be banks or broker-dealers, but rather a variety of financial services tasks.

The crypto regulatory plan introduced by Gillibrand and Lummis has a number of provisions, including tax breaks.

What all are the other legislations? Should you be worried

The bipartisan duo has written a law that includes a uniform set of rules for how cryptocurrencies should be regulated, whether as commodities or securities, as well as provisions for consumer protection, privacy, and stablecoins.

Senator Lummis claims that the majority of cryptocurrencies are commodities, putting them within the jurisdiction of the Commodity Futures Trading Commission for spot and futures trading.

She claims that crypto items bundled into securities would be subject to the so-called Howey Test, a case law test that helps decide what constitutes a security and The Securities and Exchange Commission has jurisdiction over this matter.

BlockFi was accused of failing to register its retail cryptocurrency lending product.

By looking to the SEC to enforce consumer protection on exchanges, the legislation also protects customers on exchanges from losing money in the event of hacking.

Crypto exchanges should register with the SEC, according to SEC Chair Gensler.

If companies do not comply, Gensler said, the SEC may take enforcement action, citing the case of BlockFi, which was punished by the SEC earlier this year for failing to register its retail crypto lending product.

The Commission also recently proposed new bitcoin accounting regulations to protect cryptocurrency assets held by businesses for consumers against hacker damages.

ALSO READ: Solana Blockchain Getting Over an Agonizing Blackout

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing