The newly reinvented Token Taxonomy Act (TTA) will form a de minimis tax rule – exempts all crypto transaction that does not reach the $600 threshold – to be taxed as capital gains.
Speaking at the Consensus 2019 on May 13th, Jerry Brito – Coin Center Executive Director – specified that according to the TTA, re-introduced by the US government, unless the capital gain acquired by crypto owners exceed the $600 figure, they need not report it back to the Internal Revenue Service (IRS).
Brito further expressed that the above-mentioned situation is fairly similar to how small profits in foreign currencies required to be reported before the US Congress established the “de minimis proviso” in the 90s. Should an individual buy a particular amount of foreign currency to go traveling in that country, they have to legally let the authority know if there are any capital gains made, during the time such currency is in their possession.
Brito also noted that it was compulsory to report to the government anytime cryptocurrency is involved in any transactions, even small ones such as acquiring a new laptop, plane tickets, or drafting a new smart contract – where a small sum of Ethereum (ETH) or other cryptocurrencies – are needed. Legally, it is up to the regulatory authorities to decide whether these small gains need to be reported.
Should the TTA approved, it will also change how cryptocurrency is currently classified, as security. The TTA would also determine the boundaries of jurisdiction, of the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC), along with clarifying the regulation for the compliance and enforcement of crypto statutes.