TLDR
- US lawmakers debated crypto tax policies during a Senate Committee on Finance hearing.
- Lawrence Zlatkin of Coinbase proposed a de minimis tax exemption for crypto transactions under $300.
- Lawmakers discussed the potential classification of staking income as taxable earned income.
- Senator Elizabeth Warren expressed concerns over crypto tax exemptions, citing potential revenue loss.
- The committee discussed the need to address a $700 billion tax gap through tighter crypto tax enforcement.
On Wednesday, US lawmakers discussed crypto tax policy during a Senate Committee on Finance hearing. They focused on potential tax exemptions for crypto transactions under a certain threshold and how staking income should be taxed. With the looming threat of a government shutdown, tax policy became a central issue for the committee.
Zlatkin Urges $300 Crypto Tax Exemption Proposal
Lawrence Zlatkin, Vice President of Tax at Coinbase, proposed a de minimis exemption for crypto transactions under $300. He argued that such an exemption would encourage the commercial use of cryptocurrency and stimulate innovation in the US. Zlatkin emphasized that the same tax rules should apply to cryptocurrency transactions as they do to traditional financial transactions, including stocks and commodities.
Zlatkin pointed out that the lack of clear tax rules for cryptocurrency creates real consequences for businesses. “The guiding principle is simple parity with traditional finance,” Zlatkin said. He urged lawmakers to consider this exemption to help crypto transactions thrive.
Staking Income Classification and Tax Enforcement
Lawmakers also debated how to classify income from cryptocurrency staking services. Some suggested that staking rewards should be treated as earned income subject to taxation under the tiered tax system. The committee discussed whether this approach could help close the $700 billion annual tax gap.
Massachusetts Senator Elizabeth Warren raised concerns over crypto tax exemptions. She argued that providing special exemptions for crypto could lead to lost tax revenue and unfair advantages for crypto investors.
“Crypto holders aren’t paying at least $50 billion per year in taxes they owe,” Warren stated.
Warren also warned that crypto tax exemptions could facilitate money laundering and undermine US sanctions. She emphasized that all crypto-related income should be taxed under the existing securities and commodities framework.
