What are the 3 Proposed Changes in "Token Taxonomy Act of 2019" ?2 min read
by Tony Bellan | May 16, 2019
United States H.B. 2144, known as the "Token Taxonomy Act of 2019," proposes changes regarding tax and securities regulations. Such changes include: amendments to the definition of a security, creation of a tax exemption for exchanges of one virtual currency for another, and creation of a de minimis exemption from capital gains realized from a sale or exchange.
The “Token Taxonomy Act of 2019” proposes to amend the Securities Act of 1933 and the Securities Exchange Act of 1934. Specifically, the bill aims to:
“[E]xclude digital tokens from the definition of a security,” -
SEC. 2. Securities Act of 1933.
(b) Definition of security.—Section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) is amended—
(1) by inserting “(A)” after “(1)”; and
(2) by adding at the end the following:
“(B) Such term does not include a digital token.”.
“[C]reate a tax exemption for exchanges of one virtual currency for another,” (i.e., like-kind exchanges) -
SEC. 9. Certain exchanges of virtual currency treated as non-taxable exchanges.
(a) In general.—Section 1031 of the Internal Revenue Code of 1986 is amended—
(1) in the heading, by striking “real property” and inserting “certain property”; and
(2) in subsection (a), by adding at the end the follow new paragraph:
“(4) EXCHANGE OF VIRTUAL CURRENCY.—An exchange of virtual currency (as defined under section 408(m)) shall be treated as if such exchange were an exchange of real property under this section.”.
“[C]reate a de minimis exemption from taxation for gains realized from the sale or exchange of virtual currency for other than cash” -
SEC. 139G. Gain from sale or exchange of virtual currency.
“(a) In general.—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.
“(1) IN GENERAL.—The amount of gain excluded from gross income under subsection (a) with respect to a sale or exchange of virtual currency shall not exceed $600.
“(2) AGGREGATION RULE.—For purposes of this subsection, all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange.