Virtual Currency Tax Fairness Act of 2020 affects Bitcoin, Ethereum and other cryptocurrencies

By Dorothy 01/22/20 2:48 AM

On Thursday, Washington Congresswoman Suzan Delbene and Arizona Congressman David Schweikert introduced a new bill called the Virtual Currency Tax Fairness Act in 2020. The bill received bipartisan support, as reported by Coin Center, a support group for cryptocurrencies. The bill proposes to amend the Internal Revenue Code of 1986. If successful, the gross income from the cryptocurrency will be excluded from capital gains tax if the money is used for personal purchases. This will apply to all profits below $ 200.

cryptocurrencies-tax — Image via Atozmarkets

The bill is likely to solve a major problem with payments made through Bitcoin, Ethereum, and other major cryptocurrency networks where an exception will be made to the potential capital gains tax that usually occurs when these digital assets are used in everyday commerce.

In 2019, a number of different members of Congress commented on Bitcoin. For Congressman Brad Sherman (D-CA), claiming crypto assets is a threat to the U.S. dollar, and Congressman Patrick McHenry (R-NC) shares his own price-raising remarks about long utility term of Bitcoin.

Virtual Currency Tax Fairness Act 2020

The bill, dubbed the Virtual Currency Tax Fairness Act, is a major push for cryptocurrency adoption. In addition to a lot of cryptocurrencies, complex user interfaces, and prudent use needs, the adoption of the bill could see users using coins to pay, pushing adoption, and improving coin exposure to the masses.

The resulting network effort will be enough for Bitcoin and other cryptocurrencies to mount themselves into a global currency that anyone in the world can use as a medium of exchange, especially through platforms like the Lightning Network to pay small payments.

IRS capital gains tax is based on transaction volume, but with this exclusion, individual transactions with a capital increase of less than $ 200 are excluded from the tax. Therefore, that means merchants, and generally, enthusiasts who prefer to pay for goods and services in Bitcoin and cryptocurrencies will regret it because the IRS now considers it the event of a sale, so taxable.

A taxable event of Bitcoin

Under current U.S. law, using Bitcoin to pay for goods or services is considered a sale of those Bitcoin holds, which is a taxable event. Users must track the profit earned each time they want to use Bitcoin or another cryptocurrency asset as a medium of exchange – at least if they plan to pay the appropriate amount of tax.

The progress of this bill needs to be closely monitored by anyone who holds crypto assets, along with five other major Bitcoin trends that will follow in 2020.

An analyst recently said there is a 60% chance of approving a Bitcoin ETF by 2020. Many financial advisers are expected to add Bitcoin to their customer portfolios by 2020 and acceptance. The increase in digital assets in the financial industry combined with the upcoming halving event are two important parts in the case of an industry executive’s price increase for Bitcoin by 2020.