US Lawmakers Seek Tax Exemption for Bitcoin Transactions Below $600

Unveiled today, the measure, if passed, would create a de minimis exemption for cryptocurrency payments below $600 after December 31 of this year. Put more simply, transactions involving a cryptocurrency below that threshold wouldn’t trigger a capital gains liability.

As the text of the bill states:

“Gross income shall not include gain from the sale or exchange of virtual currency for 5 other than cash or cash equivalents….[if the amount of gain excluded from gross income under subsection (a) with respect to a sale or exchange shall not exceed $600.”

In an interview with CoinDesk, Jerry Brito, executive director of the DC-based nonprofit Coin Center – which helped advocate for and organize the bill – compared the move to one taken previously by Congress to create an exemption for purchases made using foreign currency.

“What we have done with this bill is do something very similar, to create a de minimis exemption for small purchases.”

As for the prospects of the bill in a Congress beset by Republican infighting and looming fights over the federal government’s funding and ability to borrow, Brito struck a cautiously optimistic tone, pointing to the ongoing effort to reform the US tax system as aligning with the goals of the new bill.

“This should be unobjectionable to members of the Congress,” he said.

The full text of the bill can be found below:

CTFA by CoinDesk on Scribd

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San Diego, California, Nov 16th 2015: The bit coin was invented by Satoshi Nakamoto in 2008 as a digital form of money but no one truly knows who Satoshi Nakamoto is. Transactions are done through peer to peer networks without the need of a bank making it the first decentralized digital currency. This is a close up photo of several gold plated bitcoins together symbolizing the bit coin market, modern technology, finance, internet, trading, etc.

Financial markets are determined by supply and demand factors, as well as information on who owns an asset and who wants to buy that asset. This of course relies on market transparency, as traders and insiders watch what hedge funds and pension funds are doing with their equity holdings.

Bitcoin is obviously slightly different as the digital currency is transparent – but anonymous.

Bitcoin ownership is not transparent

While transactions and the movement of Bitcoin is open and available on the ledger, the name behind those transactions is anonymous, just a string of usually untraceable letters and numbers.

This of course makes it a bit more difficult to determine who owns Bitcoin, and where money is moving or staying, but this is seen as a positive for the digital currency.

In this digital world where cybercrime and hacking is always around the corner, those with sizeable investments in Bitcoin would prefer to remain anonymous so as to not set a target on their backs – additionally, they can spread the wealth across a number of wallets.

Bamboozling the IRS

Of course, not being able to tie mass fortunes down to certain individuals makes it frustrating for financial regulators trying to keep tabs on money for legal and illegal uses.

The IRS has had to rely on the trust of Bitcoin users in declaring taxable gains, but when in 2015 only 802 individuals claimed profits or losses in relation to Bitcoin transactions, it was clear that anonymity was being abused.

However, there are motions in play to help governmental institutions to track users and their Bitcoin, but it’s being met with resistance.

The Bitcoin rich list

The website BitcoinRichList, suggests that the top 100 Bitcoin addresses own around 17 percent of all Bitcoins.

This figure stood closer to 20 percent in August 2016, so one can assume that the ensuing 800 percent rally in prices since then has seen some larger holders taking profits amid increased and broadening participation.

Breaking the anonymity

Of course, while it’s easy to hide behind the anonymity afforded by Bitcoin, many come out and show off proudly their investments in the digital currency.

The biggest names in the business that are loud and proud are Cameron and Tyler Winklevoss, who once said they owned one percent of all Bitcoins. That would be around 1.65 mln at the current level that has been mined.

It is also believed that the mysterious creator of Bitcoin, Satoshi Nakamoto, who is rumored to have over one million coins, has spread his coins across wallets.

The other big players in Bitcoin include those involved in its creation, mining, or exchanges of the digital currency.

Names like Tony Gallippi, the Chairman of virtual currency processor Bitpay, who is said to have $20 mln invested in Bitcoin, or Dave Carlson, a software engineer who set up Bitcoin mining company MegaBigPower.

HaTTiP

China Trolled us – To legalize ICOs?

China ICO story not over

https://cointelegraph.com/news/bitcoin-exchange-bitfinex-adds-neo-price-soars-as-china-hints-ico-story-not-over

Bitcoin has also reversed its previous losses, continuing to trade at around $4600 as of press time from lows of $4008 earlier in the week.

NEO had received mixed support following the events, with commentators eagerly awaiting reactions from developers as to how the platform would continue operating under a ban or future restrictions.

The latest information from the PBoC meanwhile suggests the story is not over for ICOs in China, and that a regulated environment could surface. This, as witnessed earlier this year, would be a similar approach to that taken by Chinese regulators to cryptocurrency exchanges.

“This current ban is a ‘stop’ but not a ‘forbidden,’” a source close to regulators told a Chinese TV station in an interview.