US Congressman Reintroduces Bill With Tax Protections for Investors With Forked Crypto Assets

One of Congress’s biggest advocates for cryptocurrency reintroduced legislation Monday that would protect taxpayers from penalties on certain gains or losses on forked assets.

• Rep. Tom Emmer (R-Minn.) first presented the Safe Harbor for Taxpayers with Forked Assets Act in 2018 and then again in 2019 to address what critics have viewed as a gap in the IRS’ approach to taxing income derived from hard forks.
• In October 2019 guidance, the Internal Revenue Service said any new cryptocurrency generated by hard forks (when blockchains split into two networks, each with a native asset) would count as taxable income.
• The IRS' determination followed a letter earlier that year from Emmer and other lawmakers asking the agency to clarify its policies on cryptocurrency.
• In a press release Monday, Emmer said the latest IRS guidance has "unfairly punished" those investing in an emerging technology, adding that "what has been issued by the IRS so far is not pragmatic."
• Emmer is the ranking Republican on the House Financial Services Committee's Task Force on Financial Technology.