Biden's Mining Tax Proposal Challenged by Blockchain Association

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  • The Blockchain Association, a US-based cryptocurrency advocacy group, has submitted a letter to U.S. Senators Ron Wyden and Mike Crapo recommending changes to the taxation of digital assets.
  • The association also calls for a de minimis threshold to exempt certain low-value crypto transactions from reporting requirements.
  • The letter also calls for opposition to a proposed digital asset mining excise tax proposed by the Biden administration.

The Blockchain Association, a cryptocurrency advocacy group based in the United States, has presented a set of recommendations to lawmakers concerning the taxation of digital assets. These suggestions were outlined in a letter dated September 8, which was addressed to U.S. Senators Ron Wyden and Mike Crapo.

Cryptocurrency Advocacy Group

One of the primary points of focus in the letter was the Blockchain Association’s endorsement of the Keep Innovation in America Act. This proposed bill aims to overhaul the reporting rules for individuals involved in cryptocurrency transactions. The association stressed the importance of achieving a harmonious balance in legislation between the taxation of cryptocurrencies and conventional assets. Additionally, they called for clarity in determining how income from activities like staking and cryptocurrency mining should be taxed.

Interestingly, many of these recommendations align with those previously proposed by Coin Center, another crypto advocacy group, in August. One notable suggestion was the creation of a de minimis threshold, which would exempt certain low-value crypto transactions from the requirement of reporting for tax purposes.

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The Blockchain Association submitted this letter on the final day that the U.S. Senate Financial Services Committee was accepting responses, following their request made back in July. The association urged the committee to craft well-thought-out legislation specifically addressing tax concerns related to digital assets. They emphasized the need to avoid legislation that could provide less favorable tax treatment to digital assets compared to traditional assets, instead advocating for a level playing field.

In addition to these recommendations, the Blockchain Association called upon Senators Wyden and Crapo to oppose a proposed digital asset mining excise tax put forth by the Biden administration. They argued that such a tax could impede the growth and development of the cryptocurrency industry. This proposal, part of U.S. President Joe Biden’s fiscal year 2024 budget, suggested imposing a 30% excise tax on the electricity consumed by crypto miners.

The push for clearer guidelines on cryptocurrency taxation by U.S. lawmakers stemmed from an announcement by the Internal Revenue Service (IRS) in July. The IRS declared that staking rewards must be reported as gross income in the year they are received, introducing new standards for U.S. taxpayers in 2024. Traditionally, the IRS treats activities like buying, selling, and exchanging crypto assets as subject to capital gains and losses, with mining rewards following similar tax requirements.