• Bitcoin trades above USD 7,200 on the weekend
  • US Congress sees draft bill that classifies crypto into 3 categories: commodities, currencies and securities
  • US Congressmen urge IRS to clarify tax ruling on forks and airdrops

Friday trading did some good to Bitcoin as price actually stabilized before entering into a position of strength on the start of the weekend, moving up above USD 7,200 for the past 5 hours where it still lies now as Europe traders begin to enter the fray. With only USD 150 separating the daily low from the current high of USD 7,236 (CoinDesk), though, it will be precarious throughout the weekend.

Nevertheless, the recovery signs are beginning to be more evident across the entire crypto market, although ETH is yet to regain USD 130 territory and XRP continues to face rejections at 20 cents. It appears that Bitcoin will still need to regain USD 7,600 for altcoins to take strength and move back into familiar territory.

Bitcoin dominance at 68% and looking to breach 70% is further evidence of the face that the entire fate of digital assets will continue to rely on Bitcoin for a long while more.

Forbes published an article that will give bullish undertones to the weekend though, quoting Arizona Congressman Paul Gosar, who has introduced a draft bill, that seeks to eventually bring regulatory clarity to the cryptocurrency industry in the United States. The so-called Crypto-Currency Act of 2020 sets out and underlines the specific Federal agencies that he believes should regulate each type of crypto assets.

It also talks about three distinct categories of what crypto assets mean, dividing them into commodities, currencies and securities. The draft of the proposed bill will see commodities as those goods and services stored on blockchain, with a fungibility aspect that the market ignores the producer of.
One of the key things that the draft bill does is define three types of crypto asset; crypto commodities, crypto currencies, and crypto securities, per a discussion draft of the proposed bill.

Currencies, on the other hand, are defined as representations of US currency or synthetic derivatives that reside on a blockchain. This would include stablecoins pegged to reserves as well as currencies determined by decentralized oracles or smart contracts.

All types of debt, equity and derivative instruments on a blockchain, other than those which are operated and registered as complaint money services businesses, will be regarded as securities.

There will not be a single regulator as well, as each of the three assets would fall under the purview of a different federal regulator. The Commodity Futures Trading Commission (CFTC), it is expected, would be the agency in charge of crypto-commodities, while the Securities and Exchange Commission (SEC) would cover crypto-securities. And currencies would be left as the domain of the Financial Crimes Enforcement Network (FinCEN).

Meanwhile, the pressure for regulatory clarification regarding digital assets is being further added on by eight other US Congressmen, who have sent a joint letter to the Internal Revenue Service (IRS) bidding them to provide clear guidance and additional clarity to current crypto tax laws. The signed letter asked:

“We wrote in April of this year urging the issuance of guidance for taxpayers who use cryptocurrencies and we are pleased to see that you have issued guidance and addressed many questions we posed. We are, however, concerned that this recent guidance creates many new questions related to the topics it seeks to address, namely forks and airdrops.”

This referenced the original official ruling on expectations from the IRS on crypto tax, as reported on 9 October by Cointelegraph. In it, several points were laid out that included how holders of airdropped or forked assets would have to be taxed, regardless of the holder’s knowledge of such a fork or airdrop, or even price action following the event.

The latest letter to IRS claims that examples used hypothetically by the IRS were implausible or non-applicable, and therefore, unclear for taxpayers. It asks specifically for clarification of “dominion and control” of forks and airdrops, since the original ruling potentially meant people could face taxations even without knowledge of such events.

Free money you don’t know about? Prepare for tax.

 

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