In light of the recent end to the government shutdown, the realm of cryptocurrency is positioned to advocate for vital regulatory changes to the White House ahead of the year’s conclusion.
The month of December could prove to be transformative for digital currencies, particularly given the encouraging stance towards crypto legislation under President Donald Trump’s leadership.
The Aspirations of the Crypto Community
A communication issued on Thursday, November 20, from the Solana Policy Institute called for urgent action from both the Treasury and the IRS regarding a series of policy initiatives, positioning the Institute as a pivotal player in this advocacy.
This letter underscores that while Congress continues to deliberate, significant adjustments can be made by President Trump’s administration that could yield immediate benefits for the industry.
One principal demand reiterated in the letter is for clear tax guidelines. Key aspects such as staking, mining, airdrops, cross-chain transactions, collateral pledging, and charitable contributions require extensive clarity.
Specifically, the industry is advocating for tax regulations that avoid taxing unrealized gains, thereby aligning taxation practices with actual economic outcomes.
The industry is also urging the Treasury Department to propose changes defining staking and mining rewards as properties that are taxed when they are sold, taking cues from long-standing tax laws concerning asset transactions.
Another vital request centers on the necessity for regulatory certainty. The sector is calling for a framework that supports developers, decentralized finance (DeFi) entities, and the safeguarding of digital assets. The ask includes provisions for no-action relief and safe harbor amid the current regulatory landscape.
The letter highlights the importance of DeFi protection and innovation. It implores FinCEN for updated guidelines and emphasizes the need for robust cybersecurity practices to cultivate a flourishing decentralized project environment in the United States.
Moreover, a suggestion has been made for the IRS to clarify that activities associated with blockchain technology, like cryptographic engineering and smart contract crafting, should be eligible for research and development tax incentives.
The SEC’s Token Safe Harbor Framework as a Benchmark
A significant aspect of the letter also raises the call for justice regarding Tornado Cash developer Roman Storm, pressing the Department of Justice to dismiss charges against him.
The proponents assert that such a decision would reaffirm the Administration’s dedication to safeguarding developers and acknowledge that the dissemination of open-source software constitutes a form of speech protected by the First Amendment.
Additionally, the letter advocates for bolstering US software development through the recommendation of safe harbors and regulatory sandboxes for DeFi projects and their creators.
This approach would facilitate the deployment of tokens and protocols, promoting innovation in digital assets while fostering the development of intuitive web interfaces. The industry cites SEC Commissioner Hester Peirce’s Token Safe Harbor Framework as a preferred model.
Alongside these proposals, anticipation grows for the impending Market Structure bill, which is designed to offer greater clarity within the digital asset ecosystem.
Reports indicate that markup sessions for this crucial legislation are set for early December, suggesting that significant changes could be on the horizon as the year comes to a conclusion.
Image courtesy of DALL-E, chart sourced from TradingView.com.
