(Yahoo!Finance) - Senators Cynthia Lummis (R, WY) and Kirsten Gillibrand (D, NY) are proposing a tax exemption for up to a certain level of capital gains on cryptocurrencies, as part of new forthcoming legislation to regulate cryptocurrencies.
“We came up with a number of $600 just start out with, but among the things that we're doing is sharing our bill draft with a number of our constituents so we can get feedback,” Lummis said in an interview with Yahoo Finance. “Is $600 the right number? Should it be higher considering inflation, and in other factors?”
Unlike traditional classes, like stocks and bonds, both senators believe crypto should be allotted a capital gains tax pass up to a certain amount allowing ease of use.
“This is not like owning a stock because you're not using your stock portfolio to play a computer game online,” said Gillibrand. “Imagine a kid owning some cryptocurrency in a game, and if he has $40 worth of cryptocurrency, you need to have a de minimis amount so that kid’s not filing taxes.”
Gillibrand says blockchain technology is creating a platform for multiple uses, from community organizing, to investing in art, and allowing NFT's to be traded and used as something of value that will remain a digital asset.
She says the technology needs to be useable for its purpose, and that crypto entities aren’t trying to be banks or broker dealers, but all different types of functions across financial services. Tax exemptions are just one of the many pieces of Gillibrand and Lummis’ crypto regulation bill.
The bipartisan duo have created a comprehensive bill offering a standard set of definitions for how cryptocurrencies should be regulated, whether as commodities or securities, as well as address consumer protection, privacy, and stablecoins.
Senator Lummis says most cryptocurrencies are commodities, which would put them under the jurisdiction of the Commodity Futures Trading Commission for trading spot markets and futures markets. She says for crypto products that are bundled into securities, they would have the so-called Howey Test, a case law test that helps determine what's a security, which would fall under the Securities and Exchange Commission.
“We're trying to create that opportunity to continue to innovate while having the playing field more clearly delineated,” said Lummis.
The legislation also provides for protecting users on exchanges against losing money in the event of hacks, by looking to the SEC to enforce consumer protection on exchanges. SEC Chair Gensler encouraged crypto exchanges to register with the Commission.
Gensler warned that the SEC could bring enforcement action if firms do not comply, citing the example of how the SEC charged BlockFi with failing to register its retail crypto lending product earlier this year. The Commission also recently outlined new cryptocurrency accounting standards that would protect crypto assets held by companies for users against hacking losses.
Regulating stablecoins
When it comes to stablecoins, the senators feel the Office of the Comptroller of the Currency would be the best regulatory agency to oversee them. While the OCC is one of the nation’s major regulators of banks, the senators don’t want to regulate stablecoins as if they are banks. They also don’t want to limit stablecoins to only being banks.
“We're trying to create that opportunity to continue to innovate while having the playing field more clearly delineated,” said Lummis.
The legislation also provides for protecting users on exchanges against losing money in the event of hacks, by looking to the SEC to enforce consumer protection on exchanges. SEC Chair Gensler encouraged crypto exchanges to register with the Commission.
Gensler warned that the SEC could bring enforcement action if firms do not comply, citing the example of how the SEC charged BlockFi with failing to register its retail crypto lending product earlier this year. The Commission also recently outlined new cryptocurrency accounting standards that would protect crypto assets held by companies for users against hacking losses.
Regulating stablecoins
When it comes to stablecoins, the senators feel the Office of the Comptroller of the Currency would be the best regulatory agency to oversee them. While the OCC is one of the nation’s major regulators of banks, the senators don’t want to regulate stablecoins as if they are banks. They also don’t want to limit stablecoins to only being banks.
By Jennifer Schonberger · Senior Reporter
