Lawmakers urge for new US crypto tax guidelines

April 17, 2019, | AtoZ Markets - A bipartisan group of the House of Representatives has recently addressed the Internal Revenue Service (IRS) with a request for a new US crypto tax guidelines. 21 members of the House of Representatives has urged Commissioner Charles Rettig to update its five-year-old guidelines on cryptocurrency-related activities.

New US crypto tax guidelines request in a brief

The bipartisan group of 21 members of the House of Representatives led by representative Tom Emmer from Minnesota has requested a written response regarding new US crypto tax guidelines from the IRS no later than May 15.

The House of Representatives letter says:

“While we acknowledge and appreciate the guidance your agency released in 2014, there is still substantial ambiguity on a number of important questions about the federal taxation of virtual currencies.”

Further, the US lawmakers in their request point on certain issues regarding US crypto tax issues. The politicians mention the following problems that accompany the crypto taxation legislation process:
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  1. Acceptable methods for calculating the cost basis of virtual currencies.
  2. Acceptable methods of cost basis assignment and lot relief for virtual currencies.
  3. The tax treatment of forks for taxpayers that use virtual currencies, such as the 2017 hard fork of the Bitcoin blockchain.

The USA and Japan crypto taxation in a brief

Several countries, including the USA, face the challenge of using cryptocurrency and taxation. The National Tax Agency of Japan is weighing a proposal whereby different types of cryptocurrency will be subject to various taxes, including earned income, profit or loss from trading, cryptocurrency trading, small crypto calculations, and purchases. In the United States, cryptocurrency has short-term and long-term capital gains and losses that are reported separately.

France issues comprehensive regulations for cryptos

France’s Finance Minister Bruno Le Maire during his speech at the Paris Blockchain Conference noted that the country has established an optimal regulatory framework for cryptocurrencies. “I will propose to my European partners that we set up a single regulatory framework on crypto-assets inspired by the French experience. Our model is the right one.”

It is worth noting that France, despite its attitude toward anonymous cryptos, is the first major country that takes into account the real-world use of cryptocurrencies in modern markets. The French tax regulators play a leading role in the European Union. Recently the local authorities have officially recognized cryptocurrencies allowing crypto companies to apply for certification issued by the government.

The new crypto regulation bill, issued by the financial regulators of France includes optional and compulsory licensing, which will require crypto companies to apply the rules, which are designed to clarify legislation by encouraging innovation in the crypto and blockchain industry. Certification will also give investors some protection from fraudsters and scammers, but will not protect them from any losses. Traders, custodians, issuers, and investors will also have to pay taxes on crypto profits.

ICOs on the French regulators’ radar

The April 11 Law on the Action Plan for Growth and Transformation of Business (Pacte) requires cryptocurrency exchanges and custodial providers to register their enterprises in accordance with the rules of the fight against money laundering and the rules of "know your customers." It also establishes the legal framework for the initial offers of coins (ICO).

As the local media reports France’s Financial Markets Authority, Autorité des marchés financiers (AMF), will closely monitor the ICO market. The authorities report states:

The raising of funds without AMF approval will continue to be legal in France. However, issuers who have not received the approval of the AMF will not be able to solicit the general public. The AMF will publish the list of ICOs that have received its approval.

AMF Chairman Robert Ophèle, in one of his recent interviews, added:

“These are common sense rules. This regime will enable us to address this new issue with a proportionate framework that both protects investors and fosters innovation. We believe it will attract good projects.”

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