The Virginia State Senate has introduced legislation that delineates regulations for the mining and transactions of digital assets and their treatment under tax laws.
Senator Saddam Azlan Salim, the youngest member of the legislative body at 34 years old, proposed Senate Bill No. 339 on Jan. 9. The Senate is discussing the legislation, and if it passes, it will go to the House of Delegates for consideration, and then be signed into law.
The bill exempts individuals and businesses engaged in digital mining activities from obtaining money transmitter licenses. It also shields miners from discrimination by prohibiting industrial zones from banning digital assets mining or imposing more restrictive noise ordinances than those in place in industrial zones.
“No license 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.”
In addition, the legislation exempts issuers and sellers of digital assets from securities registration requirements if certain conditions are met, such the digital asset not being considered an investment contract:
“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 asset as a financial investment.”
Companies offering mining or staking services cannot be classified as a “financial investment” under the bill. However, they must file a notice to qualify for the exemption.
Furthermore, the legislation incentivizes the use of cryptocurrencies for everyday transactions by offering tax benefits. The bill proposes that starting from Jan. 1, 2024, individuals can exclude up to $200 per transaction from their net capital gains for tax purposes. This exclusion applies to gains derived from the use of digital assets for purchasing goods or services.
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