New tax rules pertaining to digital assets such as cryptocurrencies are being proposed in the U.S. Congress.
The House Ways and Means Committee has released draft legislation that would change how taxpayers report gains and losses from digital assets such as Bitcoin (CRYPTO: $BTC).
The new rules would delay taxation on newly created digital tokens. Specifically, tokens created through mining or staking would not be counted as income until they are sold.
When sold, any gains or losses would be treated as ordinary income rather than capital gains.
The proposed legislation also includes separate provisions for stablecoins, which are cryptocurrencies whose value is pegged to another asset, typically the U.S. dollar.
The draft proposal would close loopholes that allow cryptocurrencies to avoid tax restrictions applied to securities trades.
The measure would also impose “wash sale” restrictions on crypto, preventing investors from claiming losses on the sale of an asset if they buy a similar asset within 30 days.
The legislation would allow professional traders of crypto to use the mark-to-market tax regime available to stock traders.
That regime taxes annual unrealized gains and losses and can benefit traders by allowing them to use losses to offset tax on other income.
The draft legislation is still in the early stages of winding its way through Congress.
Bitcoin is currently trading at $62,400 U.S., about half the all-time high of $126,000 U.S. it reached last October.
