Senator Lummis Unveils Bill To Clarify Cryptocurrency Tax Obligations

• Senator Cynthia Lummis has introduced a digital asset tax legislation to rewrite unfair digital asset tax obligations in the US.
• Lummis’s new bill ultimately aims to promote innovation in the US by unburdening digital asset users from archaic tax policies.

As America aims to become the global crypto capital, Senator Cynthia Lummis has introduced a digital asset tax bill to address the country’s unfair crypto taxation policies, establish clear guidelines that promote innovation in the sector, and standardize the rules for all.

Lummis’ Bill to Streamline US Crypto Taxation

According to the Bitcoin Senator, overhauling the tax code to promote the digital economy and not burden digital asset users is crucial to maintaining America’s “competitive edge.”

“This groundbreaking legislation is fully paid-for, cuts through the bureaucratic red tape and establishes common-sense rules that reflect how digital technologies function in the real world,” said Lummis.

ADVERTISEMENT*“We cannot allow our archaic tax policies to stifle American innovation, and my legislation ensures Americans can participate in the digital economy without inadvertent tax violations.”*

The legislation establishes a $300 de minimis exemption for digital asset gains or losses. In other words, you will not owe taxes on small personal transactions on small digital asset transactions like buying a coffee with your crypto, thus eliminating the virtually impractical compliance burdens for everyday crypto users.

Additionally, a taxpayer’s total gain for a fiscal year is taxed only when it exceeds $5,000. These thresholds create a healthy balance between the payment of taxes and the use of digital assets to make transactions.

ADVERTISEMENTThe new tax legislation also rules out immediate tax implications for digital asset lending agreements, encouraging lending businesses to efficiently carry out their enterprises. That way, digital asset lending functions like securities lending without any tax implications.

Furthermore, Senator Lummis’s bill excludes crypto donations from appraisal requirements, eliminating unnecessary paperwork hassles that discourage the use of digital assets for philanthropic causes like other publicly traded digital asset classes.

Fair Tax Reforms For Mined and Staked Crypto

Under the bill’s provision, crypto mining and staking income will be treated as ordinary income and will not be counted for taxation until it is sold or disposed of. This prevents miners and stakers from owing taxes on assets they can not easily liquidate and also potentially buys them time to realize gains at the most favorable market value.

The tax bill was meant to be part of the amendments in President Trump’s One Big Beautiful Bill Act, a legislation that increases the annual tax deduction for small businesses, but it failed into make it into the bill. The nature of the new tax bill makes it unclear whether it will advance as a standalone bill or pair with some other comprehensive regulatory initiative

Sen. Lummis has called on the public to provide comments on the legislation. The crypto-friendly lawmaker remains one of the top voices in the legislature, championing pro-Bitcoin and pro-innovation bills in tandem with President Trump’s agenda to establish American global dominance.

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