Bitcoin News
By Steven Anderson
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The Transaction Tracking Problem. Think about using crypto to buy groceries. Under current rules, you'd need to calculate the…
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Why Current Rules Don't Work. The Cato Institute's argument boils down to this: capital gains taxes weren't designed for currency.
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What Happens Next. The Cato Institute's proposal joins a growing pile of cryptocurrency policy recommendations…
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The Cato Institute dropped a bold proposal this week. The Washington DC think tank wants the US government to kill capital gains taxes on cryptocurrencies completely.
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Right now, every time someone in America sells crypto for a profit, they owe capital gains tax. Bought Bitcoin at $30,000 and sold at $40,000?
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Think about using crypto to buy groceries. Under current rules, you'd need to calculate the difference between what you paid for that crypto originally and its value when you…
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That's not how currency works in practice. Nobody calculates capital gains when they exchange dollars for euros on vacation.
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The think tank sees bigger economic benefits too. More payment options means more innovation.
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The proposal landed on desks in Washington, but tax authorities haven't commented. The IRS didn't respond to requests for feedback. Neither did the Treasury Department.
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The Cato Institute's argument boils down to this: capital gains taxes weren't designed for currency. They were designed for investments. When you buy a stock, you're investing.
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But currency is different. You don't buy dollars expecting them to appreciate. You use dollars to buy other things.
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The complexity hits hardest on small transactions. Someone spending $50 worth of Bitcoin on dinner needs to know the original purchase price of that specific Bitcoin.
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And the reporting requirements pile up fast. Frequent crypto users could face hundreds or thousands of taxable events per year. Each one needs documentation.
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The think tank points out that this wasn't necessarily intentional. When the IRS first issued guidance on cryptocurrency taxation back in 2014, digital currencies were mainly…
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The Cato Institute's proposal joins a growing pile of cryptocurrency policy recommendations floating around Washington. Some lawmakers want stricter regulations.
The Currency Analytics
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