Important Bill in US Congress Regarding Taxing of Crypto
Note: The bill does included staking rewards as created property.
Here is the article mentioned in hte video:
https://cointelegraph.com/news/crypto-mining-block-rewards-taxes-legislation
In this video I discuss how there is a bill that was presented in Congress that would alter the US tax code and treat crypto that comes as a result of block production (for either PoW or PoS) as created property. This means the tax implications would not be applied when it is received but, rather, when it is sold.
▶️ 3Speak
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Well, it's something. I just wish the guvment would keep their hands out of my pocket unless they planned on spending that money on something more than military surplus and pay raises.
One’s a Republican, the other a Democrat. So, maybe a chance for it? The Democrat is a backbencher, but the Republican is Chief Deputy Whip.
It's hard to imagine this being a thing because these mining companies could start collateralizing their Bitcoin in exchange for secured debt, and thus never sell it, and thus never incur a tax event. Might be interesting.
So you are saying a law that favors corporations and not the general population?
You are right...never will happen.
Well yeah in theory it benefits anyone with access to cheap energy but that does tend to be the bigger entities. A tax reduction to zero seems a bit extreme but perhaps this is par for the course.
Well that is how the tax code does handle things such as stock options. They are taxable until they are exercised.
Do you mean are or are not?
Oops.
Are not. You are correct.
It doesnt matter to me...Roger Ver is my crypto accountant. He will tell me what to do (or not to do).
I guess I'm not surprised. Once ETFs were approved, it was only a matter of time before crypto was taxed. I wonder how they can enforce this though. Maybe they can work with CEX, but I wonder if people use things like the V4V app and pay with crypto directly. It wasn't technically sold for profit, and the purchase is taxed anyways.
Crypto has always been taxable, at leas tin the US. Just ask Roger Ver who is now facing a lot of trouble over his failure to pay taxes.
The idea crypto was tax free or exempt wasnt true.
I see. I don't think it is in the Philippines. But since we seem to be copying a lot of what the US is doing with crypto (Binance issues), we might be implementing something similar soon.
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https://twitter.com/MunirTahir67705/status/1785940032861376541
Taxing crypto! If they pull it through in the US, the whole world will adopt it. But must they take our money?
Is you are asking you do not understabd politicians.
Well, not as if I'm against development. Because they always say they are using the taxes for infrastructural development. It's only that we pay much and see little done.
Summary:
The video discusses a proposed U.S. bill called the "Providing Tax Clarity for Digital Assets Act" that aims to change how block rewards from cryptocurrency mining are taxed. Currently, block rewards are treated as taxable income when they are earned, similar to a paycheck. However, this bill proposes that block rewards would only be subject to taxation when the cryptocurrency is eventually sold, not when it is first received.
The host explains that this would be a significant shift, as companies that mine cryptocurrencies would no longer have to pay taxes on their block rewards immediately. Instead, they could hold onto the cryptocurrency and only pay taxes when they decide to sell it. This is different from how traditional businesses are taxed on their revenue when it is earned, rather than when the money is spent.
The host also briefly discusses how this bill may impact staking rewards, noting that staking payouts that come from existing coins would likely still be taxable, while staking rewards from newly minted coins could potentially be covered under the proposed legislation, depending on the specific wording.
Overall, the video provides an overview of this proposed tax change and its potential implications for the cryptocurrency industry.
Detailed Analysis:
The host begins by explaining that a new bill has been introduced in the U.S. Congress that could have significant ramifications for cryptocurrency users, particularly those involved in mining. The bill is called the "Providing Tax Clarity for Digital Assets Act" and was introduced by Representatives Drew Ferguson and Wiley Nickel.
The key aspect of this bill is that it would change how block rewards from cryptocurrency mining are taxed. Currently, block rewards are treated similarly to a paycheck - the income is recognized and taxed when it is earned, even if the miner does not immediately sell the cryptocurrency.
The host uses the example of a Bitcoin mining company to illustrate how this works. When the company mines Bitcoin and receives the block rewards, that revenue is recognized on their tax return for that year. The company can then deduct their expenses, such as electricity and equipment costs, to determine their taxable profit, which is then subject to corporate income tax.
However, the proposed bill would shift this treatment, so that block rewards would only be taxed when the cryptocurrency is eventually sold, rather than when it is first earned. This means a Bitcoin mining company could hold onto their mined Bitcoin for years before selling it, and only pay taxes on the gains at that point.
The host explains that this change is being proposed because cryptocurrencies are fundamentally different from traditional fiat currencies. When a company is paid in dollars, they can use that money to directly pay their taxes. But with cryptocurrencies, the miner has to first convert the digital assets into fiat in order to pay their tax bill. This can create cash flow issues and force the miner to sell their cryptocurrency prematurely.
The host notes that this tax treatment shift could have major implications, as it would significantly reduce the upfront tax burden on cryptocurrency miners and block producers. However, he cautions that the bill has only been introduced, not yet passed, so there is still uncertainty around whether it will become law.
The host also briefly discusses how this proposed legislation may impact staking rewards. He suggests that staking payouts from existing coins would likely still be considered taxable income, but staking rewards from newly minted coins could potentially be covered under the bill, depending on the specific wording.
Overall, the video provides a detailed explanation of this proposed tax change and its potential ramifications for the cryptocurrency industry. The host does a good job of using clear examples to illustrate the current tax treatment and how the new bill would alter it.