Republican Rep. Tom Emmer has called for more precise regulations on taxing surplus cryptocurrency after a report commissioned by the Law Library of Congress showed a sharp contrast between the regulatory methods used by various tax authorities around the world.

The 128-page study looks at tax rules for cryptocurrencies in 31 countries, with a focus on their applications for coins and tokens obtained through mining and storage. As noted in the report, many countries have already established specific rules for currencies obtained through mining, but only five of them have established any recommendations for potential players.

It was found that of the 31 jurisdictions included in the study, only Australia, Switzerland, Finland, New Zealand and Norway applied tax rules on contributions.

Proof of Stake, or PoS, is a consensus mechanism used by many blockchains as an alternative to demonstrating more power-intensive work that Bitcoin (BTC) uses. The process is similar to mining cryptocurrencies, but instead of trying to collect as much computing power as possible, PoS sees people “acquire” their coins on the blockchain in exchange for a proportional share of the block reward.

The report also describes the taxation rules related to coins purchased through air drops and hard forks, where tokens are either issued for free or created as a result of the creation of a new blockchain. Only six countries have mentioned air drops or hard forks in their national tax regulations: Finland, Japan, New Zealand, Australia, Singapore and the UK.

Emmer said clearer guidance from the IRS is needed to avoid stifling technological innovation in the United States:

“For these technologies to flourish and reach their revolutionary potential, we need to have the knowledge and the regulatory framework for a normative approach to better implement the right path forward that will not overwhelm this innovation. We can improve the taxation of tax authorities while ensuring that these taxes are used wisely. “.
Abraham Sutherland, legal counsel for the Proof-of-Stake Alliance, said the first logical step would be to tax the sale of tokens acquired through the stake, rather than the first acquisition.

“The critical first step is to demonstrate that rewards are taxed when new tokens are sold, like all other new properties, and not when they are first purchased. This will reduce administrative problems and ensure people are not overwhelmed, ”Sutherland said. …

Source: CoinTelegraph