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Taxing cryptocurrencies is a complicated process.
During the United States congressional meeting titled “Building Blocks of Challenge: The Benefits of Blockchain Technology for Small Businesses,” the participants discussed the effect of blockchain to small businesses. At the gathering, Protocol Labs General Council member Marvin Ammori said that “Doing your taxes for crypto is the worst nightmare,” when asked if blockchain is ready for mass adoption.
“The tax treatment is very complicated,” Ammori added and even cited an example to make his point clear.
“If you wanted to spend Bitcoin on a coffee this morning, you’d have to keep track of what you paid for the Bitcoin and how much it was worth the moment you spent it, and pay the capital gain or loss on every single transaction,” he said.
Although Ammori felt that taxing cryptocurrencies isn’t simple, he also offered a solution.
“If we could have a de minimis tax exemption, which has been proposed — the Virtual Currency Tax Fairness Act — I think all of you should support that,” he said.
Ammori also wants a clearer guideline from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commissions (CFTC). Jim Harper of the American Enterprise Institute, one of the four witnesses who sat in front of the panel, said before Ammori’s speech that the regulations for crypto and blockchain need to be clarified.
Meanwhile, Adrian Przelozny, CEO of Independent Reserve, shared earlier that Australia is behind Singapore when it comes to adopting bitcoins due to its vague regulations. He believed that it was due to the number of regulators present in the country which included Australian Transaction Reports and Analysis Centre (AUSTRAC), Reserve Bank of Australia (RBA), and the Australian Securities and Investments Commission (ASIC). Since too many regulators are involved, the process tends to be more confusing and it takes longer.
