“The United States should priori tize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills.”
——U.S. Representative Tom Emmer
U.S. Rep. Tom Emmer (R-MN) is planning to introduce three bills to support blockchain technology and cryptocurrencies, according to a press release published on September 21.
The three upcoming bills are entitled the “Resolution Supporting Digital Currencies and Blockchain Technology,” the “Blockchain Regulatory Certainty Act,” and the “Safe Harbor for Taxpayers with Forked Asset Act.” The legislation is focused on the support and development of blockchain technology, as well as the establishment of a safe harbor for taxpayers with “forked” digital assets.
“Safe Harbor for Taxpayers with Forked Asset Act” is a particularly groundbreaking legislation in line with the international community which now seeks comprehensive legislative support and explicit regulatory control. The bills would prompt the federal government to provide a “simple legal environment,” and restrict fines against individuals who report “forked” digital assets until the Internal Revenue Service (IRS) presents formal guidance on the appropriate means of reporting. According to Emmer, “taxpayers can only comply with the law when the law is clear.”
Earlier this week, U.S. lawmakers called on the IRS to issue “clarified” and “comprehensive” cryptocurrency taxation guidance. The lawmakers argue that while the IRS has proactively continued to remind taxpayers of the penalties for non-compliance with its guidance, its failure to introduce a more robust taxation framework “severely hinders taxpayers’ ability to meet their obligations.”
Taxation policy serves as an essential instrument of the U.S. support for innovative technology and industry. Therefore, minimizing the risks on reporting forked assets is critical when it comes to investments in blockchain and cryptoasset innovations, which might shed light on how Taiwan should approach it.
The general public can find themselves confused about cryptocurrency,blockchain and cryptoassets. According to Knowledge@Wharton, there is cryptocurrency : the idea that networks can securely transfer value without central points of control. There is blockchain : the idea that networks can
collectively reach consensus about information across trust boundaries. And there are cryptoassets: the idea that virtual currencies can be “financialized” into tradable assets.
According to IG.com, cryptocurrency like Bitcoin is a decentralized consensus network where the validated blocks are added to the pre-existing blocks to form a chain after all computers validate transactions and further form a consensus. This form of consensus is the core of cryptocurrencies. A fork occurs when Bitcoin Improvement Proposal is brought forward but the whole community fails to agree on it and therefore the chain of validated blocks forks into two, hard fork and soft fork, resulting in forked assets.
A blockchain fork occurs due to technological upgrade and value uncertainty and therefore should not fall under the same rules as a stock split in terms of taxation, which is why Emmer is introducing these bills to expect more investment in innovative blockchain proposals and to minimize the penalties for unintended non-compliance.
Emmer has taken up the position of co-chairman of the Congressional Blockchain Caucus, a platform for the industry and government collaboration to examine the implications of blockchain and digital currencies. According to the announcement, “the Caucus believes in a hands-off regulatory approach to allow this technology to evolve the same way the Internet did, on its own.” It requires executive and legislative collaboration on supporting and accelerating the development of blockchain and cryptocurrency / cryptoassets in terms of taxation policy.
（By Prof. Fan Chien-Te & Liu Jing-Tang, ARRS Center of Blockchain Law & Policy,National Tsing Hua University）