A new bill introduced in the U.S. House of Representatives Thursday would introduce a capital gains tax exemption for bitcoin and other cryptocurrency users who use their coins and tokens for small purchases.

The Cryptocurrency Tax Fairness Act Of 2017, introduced to the house by Rep. Jared Polis, D-Colo., and Rep. David Schweikert, R-Ariz., both members of the Congressional Blockchain Caucus, proposes a structure for taxation of cryptocurrency payments. It would allow cryptocurrency users to make small purchases up to $600 each without the need to report each transaction.

Under a ruling made by the Internal Revenue Service in 2014, cryptocurrencies are regarded as being property. that means that if a bitcoin user had acquired bitcoin for $1 but then used the currency to buy a $5 meal, the gap between the two figures is subject to capital gains.

“Cryptocurrencies can be used for anything from buying a cup of coffee to paying for a car, to crowdfunding a new startup and more and more consumers are choosing to use this type of payment,” Polis said in a statement. “To keep up with modern technology, we need to remove outdated restrictions on cryptocurrencies, like Bitcoin, and other methods of digital payment. By cutting red tape and eliminating onerous reporting requirements, it will allow cryptocurrencies to further benefit consumers and help create good jobs.”

Schweikert added that the current situation of taxing small bitcoin transactions as a capital gain was uniquely an American thing and that the law as it stands make cryptocurrency use more of a challenge than it needs to be.

In addition to the capital gains exemptions, the bill also calls upon the Treasury Department to introduce guidelines on how to report profits and losses related to cryptocurrencies, a process which the bills’ authors claim is currently unduly complicated.

If the proposed law is passed by both the House and Senate and signed by President Trump, the exemption could come into place as soon as Dec. 31.

Photo: dachis/Flickr