Warren Davidson, arguably crypto’s best friend in Congress, reintroduced the Token Taxonomy Act yesterday. He originally introduced the bill alongside Florida representative Darren Soto last year. It never made it to a vote before the 115th Congress, but Davidson has decided to reintroduce in a Democrat-controlled 116th. The new bill already differs slightly from the original, and lawyer Jake Chervinsky says it might have more changes to come:
The Token Taxonomy Act has been re-introduced in the U.S. Congress. This is the first step in a very long legislative process: the final bill could end up quite different from today's draft, and probably won't see a vote any time soon. Give it a read here:https://t.co/2Cmv4Oo8sX
— Jake Chervinsky (@jchervinsky) April 9, 2019
Bill Subject to Change Pending Congressional Approval
The language of the new bill is a bit stronger than the wording in the original. The bill limits the ability of states to regulate digital tokens as securities, by adding language to the Securities Act of 1933:
No law, rule, regulation, or order, or other administrative action of any State or any political subdivision thereof (A) requiring, or with respect to, registration or qualification of securities, or registration or qualification of securities transactions, shall directly or indirectly apply to a digital token […]
One wonders what effect the bill might have on states considering the passage of Bitlicense-like laws. Immediately following this, the bill ensures that states continue to have the right to enforce against fraud.
Democrat Tulsi Gabbard On Board
Both versions of the bill seek to provide tax exemptions for the exchange of one cryptocurrency to another. It would change the reality for American crypto users: when you exchange crypto for anything besides cash, the transaction would no longer be treated as a strictly taxable situation. This part, which amends the rules governing the IRS, reads:
Gross income shall not include gain from the sale or exchange of virtual currency (as defined under section 408(m)) for other than cash or cash equivalents.
Apparently, if you exchange your Bitcoin for something worth less than $600, you don’t have to pay additional taxes related to the realization of the value of the cryptocurrency. Entire strategies for spending and holding Bitcoin can be developed around this proposed law, which reportedly has support from Tulsi Gabbard. Gabbard is running for nomination from the Democratic party for the 2020 presidential race.
Three other sponsors have also signed on, in addition to Soto and Gabbard: Josh Gottheimer, Tedd Budd, Scott Perry, according to Coindesk, who must have received a scoop on this matter. (The House's website did not reflect any of the reported material by press time.) Most of the bill’s sponsors are members of the House Financial Services Committee, the influential body that governs banking and finance in the United States.