Congress press IRS for cryptocurrency tax clarification

Members of the United States (U.S) congress sent a letter to the Internal Revenue Service (IRS) urging the agency to provide additional clarity on cryptocurrency tax laws.

This letter followed one sent earlier to the IRS in April urging the issuance of guidance for taxpayers who use cryptocurrencies to pay taxes.

IRS originally came out with an official ruling on cryptocurrency tax expectations on Oct. 9, 2019, according to reports.

The ruling noted several points of taxation, including a tax on holders in the event of a cryptocurrency fork or airdrop, regardless of the circumstance.

The recent letter faults the initial IRS ruling mentioning that it used hypothetical examples for reference.

These references according to the query are not applicable or plausible and are therefore unclear for tax-paying citizens.

The congress letter further specified “dominion and control” as relating to forks and airdrops in the Oct. 9 IRS ruling, requesting transparency on the matter.

On the other hand, this clarification is happening in a time when the congress is pressuring for regulatory clarification regarding digital assets.

Congress draft: Crypto-Currency Act of 2020

The Crypto-Currency Act of 2020 highlights specific Federal agencies that are believed to regulate each type of crypto assets.

The act also exclusively categorise what crypto assets mean, dividing them into commodities, currencies and securities.

The bill which is still being proposed will see commodities as those goods and services stored on a blockchain, with a fungibility aspect that the market ignores the producer of.

Another precise clarification the draft brings is defining the three types of crypto-asset; crypto commodities, cryptocurrencies, and crypto securities, per a discussion draft of the proposed bill.

Bitcoin dominates, trades above USD 7,200

Friday trading favoured Bitcoin as price stabilized before rocketing into a position of strength moving up above USD 7,200.

However, recovery signs are beginning to be more evident across the entire crypto market, although ETH is yet to regain USD 130 territory and XRP continues to face rejections at 20 cents.

Bitcoin dominance at 68% and looking to breach 70% is another evidence of the fact that the entire fate of digital assets will continue to rely on Bitcoin for a long while more.