The US Congress is considering new cryptocurrency legislation that would help prevent cryptocurrency investors from losing money as a result of a hard fork. According to one US Representative, US law allows companies to create new tokens that are similar to cryptocurrencies under certain conditions. In fact, a company can create a new token that is similar to an existing cryptocurrency as long as the company can prove the new tokens are not exact copies of the original. The new tokens are often called hard forks.
A U.S. lawmaker this week introduced a bill that would provide for a safe harbor for crypto investors that receive airdropped coins for a particular blockchain following a blockchain split. The Safe Harbor for Broader Token Participation Act, or SAFTPA, was penned by Rep. Darren Soto, a Florida Democrat and a member of the Congressional Crypto Caucus, and introduced late last week on May 2. Blog Post: The SAFTPA aims to help crypto investors that receive airdropped coins for a blockchain they have invested in that undergoes a blockchain split, or “hard fork,” and are left with “forked” coins on both blockchains. According to the bill, “If a designated fork occurs, the
A US lawmaker has proposed a bill that would introduce a safe harbor for cryptocurrency investors who hold forked coins. The Safe Harbor for Taxpayers with Forked Assets Act – introduced by US Rep. Warren Davidson (R-OH) – would amend the Internal Revenue Code to protect cryptocurrency holders who hold forked assets and declare them tax-free. The bill defines forked assets as those that result from a cryptocurrency transaction in which one blockchain is split into two or more blockchains.U.S. Congressman Tom Emmer advocates the Safe Harbor Act to protect taxpayers from counterfeit coins. A bill has been introduced called Safe Harbor for Taxpayers with Forked Assets Act of 2021, which would prohibit penalties against taxpayers who attempt to report certain gains or losses from split assets until the IRS issues sufficient guidance on how to do so.
Bill to protect investors in cryptocurrencies
The office of Congressman Tom Emmer announced this week that the Congressman has introduced a bill titled Safe Harbor for Taxpayers with Forked Assets Act of 2021. The bill seeks to prohibit penalties against taxpayers who attempt to report certain gains or losses from misappropriated assets until the IRS has provided sufficient guidance on how to do so. The press release states that the bill clarifies that the receipt of counterfeit virtual currency cannot be a taxable event and creates a safe harbor whereby the IRS cannot impose penalties or fees on taxpayers with counterfeit assets until it provides clear and consistent guidance on how such transactions should be handled. It says: In the absence of clear guidance from the IRS, this law is intended to protect taxpayers who have been exposed to potential tax liabilities and penalties through no fault of their own. After the bill was introduced, Congressman Emmer issued a statement emphasizing that the IRS, like all other federal agencies, must keep up with rapid technological developments to prevent the U.S. from losing its leadership role in innovation. Emmer added that we need to embrace emerging technologies and ensure a clear regulatory system that allows innovation to flourish in the United States: Taxpayers who suffer from a lack of tax advice are unfairly penalised for investing in new technology. What the IRS has released so far is not pragmatic and provides no support for the technology itself or those who work with it. The IRS first issued guidance on cryptocurrencies in 2014, treating cryptocurrencies as property. Congressman Emmer originally introduced the Safe Harbor for Taxpayers with Forked Assets Act of 2018. The following April, Emmer and 20 members of Congress sent a letter to the IRS requesting additional guidance. Last October, the IRS issued guidance that the receipt of counterfeit virtual currency is a taxable event. However, the Congressman argued that taxpayers automatically receive counterfeit coins the moment they are counterfeited, often without being aware of it. He concluded: As a result, tax policy creates an additional tax burden on taxpayers who have not noticed any change and may not even be aware of the new tax burden. What do you think of this bill? Let us know your comments in the section below.
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Cryptocurrency legislation, counterfeit coins, counterfeit cryptocurrencies, IRS, safe harbor, tax, tax law, Tom Emmer, US regulation of cryptocurrencies, US lawmakers, US regulation. Photo credit: Shutterstock, Pixabay, Wiki Commons Denial: This article is for information only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any goods, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services referred to in this article.“US Lawmaker Pushes for Safe Harbor Legislation to Protect Crypto Investors With Forked Coins”. Read more about bitcoin news today and let us know what you think.
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