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US Congressman Reintroduces Bill With Tax Protections for Investors With Forked Crypto Assets
The legislation would outlaw penalizing taxpayers until the IRS clarifies its policies.
By James Rubin
Updated Sep 14, 2021, 12:56 p.m. Published May 18, 2021, 8:00 a.m.
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One of Congress’s biggest advocates for cryptocurrency reintroduced legislation Monday that would protect taxpayers from penalties on certain gains or losses on forked assets.
STORY CONTINUES BELOW
- Rep. Tom Emmer (R-Minn.) first presented the Safe Harbor for Taxpayers with Forked Assets Act in 2018 and then again in 2019 to address what critics have viewed as a gap in the IRS’ approach to taxing income derived from hard forks.
- In October 2019 guidance, the Internal Revenue Service said any new cryptocurrency generated by hard forks (when blockchains split into two networks, each with a native asset) would count as taxable income.
- The IRS' determination followed a letter earlier that year from Emmer and other lawmakers asking the agency to clarify its policies on cryptocurrency.
- In a press release Monday, Emmer said the latest IRS guidance has "unfairly punished" those investing in an emerging technology, adding that "what has been issued by the IRS so far is not pragmatic."
- Emmer is the ranking Republican on the House Financial Services Committee's Task Force on Financial Technology.
Read more: IRS Taps TaxBit to Audit Bulk Crypto Transactions
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Ripple's Brad Garlinghouse says CLARITY bill has '90% chance' of passing by April
The bill would clarify which digital assets fall under securities law versus Commodity Futures Trading Commission oversight.
What to know:
- Ripple CEO Brad Garlinghouse said he now sees a 90 percent chance that the long-debated Clarity Act will pass by the end of April, citing renewed momentum in Washington.
- The bill would clarify which digital assets fall under securities law versus Commodity Futures Trading Commission oversight, addressing long-standing regulatory uncertainty that Garlinghouse says has weighed on innovation.
- Ripple, which has spent nearly $3 billion on acquisitions since 2023 and is now pausing major deals to focus on integration, argues that both crypto firms and traditional financial institutions increasingly want clear rules as attitudes toward digital assets shift.
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