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The Senate of Virginia has introduced a bill that seeks to safeguard the crypto rights of the citizens. The bill delineates citizens can transact, self-custody, mine, and pay with crypto.
State Bill 339, proposed by State Senator Saddam Azlan Salim, revealed that it would exempt crypto transactions under $200 from paying state capital gains tax. The bill would guarantee regulation for the mining and transactions of digital assets and their treatment under tax laws.
Overview of the Senate Bill 339
At 34 years old, Senator Saddam Azlan Salim is the youngest legislative body member to propose several groundbreaking changes in the legal landscape for digital assets. The Senate is discussing the legislation, and if it passes, it will go to the House of Delegates for consideration before being signed into law. According to the bill, individuals and businesses engaged in digital mining are exempted from obtaining a money transmitter licence.
One notable aspect is that miners are also protected from discrimination by prohibiting industrial zones from banning digital assets mining or imposing more restrictive noise restrictions over and above those already in place. This move aims to ensure a level playing field for miners and foster an inclusive industry environment. The bill said:
“No licence under this chapter shall be required of any person engaging in-home digital asset 37 mining, digital asset mining, or digital asset mining business activities, as those terms are defined in § 38 15.2-2288.9.”
The bill also addresses the classification of assets regarding securities laws, stipulating that the legislation exempts issuers and sellers of digital assets from securities registration requirements under particular conditions. The provisions incorporate the asset not being an investment contract, not being marketed as a financial instrument, and the issuer taking reasonable precautions to prohibit its purchase as a financial instrument.
The bill added, “An issuer or seller of a digital asset shall be exempt from the securities registration requirements of this chapter if (i) the digital asset cannot be considered an investment contract, (ii) the issuer or seller of the digital asset did not market the digital asset to the initial buyer as a financial investment, and (iii) the issuer or seller of the digital asset takes other reasonable precautions to prevent an initial buyer from purchasing the digital as a financial investment.”
The Senate Bill also suggested that companies offering mining or staking services can’t be classified as a financial investment; however, they must file a notice to qualify for the exemption.
Incentives for Everyday Use of Crypto Transactions
The legislation is believed to incentivise using cryptocurrencies for everyday transactions through tax benefits. The bill proposes that from the beginning of January 2024 onwards, individuals can exclude up to $200 per transaction from their net capital gains for tax purposes when purchasing goods and services using cryptocurrencies. If the bill is passed, it could mark a crucial movement in the history of digital assets in the United States. The bill suggested that increased adoption and innovation in the digital asset space could be improved by reducing regulatory hurdles and providing tax incentives.
Countries with a Similar Bill
This bill introduced in Virginia is very similar to bills introduced in states like Indiana, Nebraska and Missouri. These are supported by the Satoshi Action Fund, a non-profit seeking to inform policymakers and regulators about the benefits of Bitcoin ($BTC) and crypto mining. In January 2024, Rep. Health VanNatter of the Indiana General Assembly (IGA) introduced a bill to guarantee state residents’ crypto rights.
The crypto bill ensures non-intervention from the state government of Indiana in crypto self-custody, validation and mining. The bill titled “Use of Digital Assets”, HB 1388, guarantees the right to self-custody.
Ilya Rekhter, founder of Megawatt, an Indiana-based sustainable BTC mining firm involved in the introduction of the bill, revealed that it took several meetings with state senators and representatives to reach the point where they are now. The bill introduced by Senator Salim is unlike the other bills as this one introduces a new element. The bill suggests that state authorities convene a work group to make and study recommendations related to blockchain technology, cryptocurrency activity, and digital asset mining in the Commonwealth. Co-founder and CEO of the Satoshi Action Fund, Dennis Porter, who participated, celebrated the advancement and recommended that the states were taking the right move to use BTC. Porter highlighted that the organisation intends to pass similar laws in at least 13 states. Porter said:
“We have so many states looking to pass laws that we need to raise more money to support those efforts.”
If the States Bill 339 proposed by Senator Saddam Azlan Salim is signed into law, it could drive increased adoption and innovation in the digital asset space in the United States by reducing regulatory hurdles and providing tax incentives.