What Crypto as a Commodities means in the USA

Ah the good old war rages on crypto vs the corrupt government that cares nothing more than to take away more freedoms and more money from you. Because honestly that's all it comes down to at the end of the day. There's not gray area simple the government taking more and more from you with each passing day.

Crypto falls into the area of the wild west as to no one really is sure how it should be taxed and if honestly it should be taxed at all. Do airdrops get taxed? Do your defi incomes get taxed? Do you pay taxes on staked earnings. One day we hear no the next we hear yes and this has been going on for years now!

One of the more recent pushes is to tax all crypto as a commodity which is being pushed by Sens. Cynthia Lummis and Kirsten Gillibrand who introduced the legislation today.

This change would then empower the Commodity Futures trading commission to regulate most of the industry.

My Take

While I hate government involvement and regulations it's become apparent that as the market grows that there needs to be oversight to hold people accountable. Sadly the world just isn't able to do it itself and the greed of the world and a few ruins it for everyone else to put it simply.

You have things like rug pulls, trash cash grab nfts, failed launched projects and so much more while investors are left with nothing and those bad actors are left will millions if not billions in their pockets. I think one of the biggest examples of this recently would be LUNA and UST and then the relaunch of the token.

How Is A Commodity Taxed

A commodity is taxed differently then that of a stock or forex trading. Unlike long term holds of the asset which are only taxed at 15% while short term are taxed at the normal rate a commodity is always taxed (at least under current rules and regulations) at 60/40 where 60% is taxed as long term 15% and 40% is taxed at the normal rate.

This could actully be of benefit to those trading cryptos as there's no longer a need for a long term hold before you sell and doing fast transactions get taxed the same as well.

Its of course unclear as to if this will pass and as we have seen in the past it can take years for anything to ever really get done and try to understand it all. The entire tax system in general is a freakin mess and throw some crypto in there and it's an even bigger one.

What are you thoughts on crypto being taxed as a commodity?

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