Senator Lummis Unveils Crypto Tax Reform Bill Targeting Transactions, Mining, and Donations
Key Takeaways:
- New bill proposes a $300 exemption for everyday crypto purchases to encourage digital payments.
- Taxation on mined and staked crypto would be delayed until assets are sold or used.
- The bill also seeks to streamline crypto lending, charitable donations, and eliminate wash sale tax loopholes.
U.S. Senator Cynthia Lummis has introduced comprehensive legislation aimed at reforming how digital assets are taxed in the United States. The proposed changes are designed to modernize tax policy and reduce barriers for those using or investing in cryptocurrencies like Bitcoin.
Tax Relief for Small Transactions, Miners, and Stakers
In a recent post on X (formerly Twitter), Lummis explained that outdated tax rules are stifling innovation. Her bill introduces a $300 de minimis exemption, allowing individuals to use crypto for everyday purchases—like buying coffee—without triggering tax reporting. Annual tax-free capital gains would be capped at $5,000.
From 2026 onward, the $300 limit would adjust based on inflation.
Currently, crypto miners and stakers owe taxes when they receive tokens, regardless of whether they sell them. Under the proposed legislation, taxation would only occur when those assets are sold or used, improving cash flow and simplifying planning.
Simplifying Lending, Closing Loopholes, and Boosting Charitable Giving
The bill extends securities lending tax rules to digital assets, meaning temporary crypto lending would not be taxed, potentially enhancing market liquidity.
It also addresses the wash sale loophole, which allows investors to sell crypto at a loss and immediately repurchase it to lower tax burdens. The legislation would enforce a 30-day restriction similar to existing stock rules.
To encourage charitable donations, the bill removes the appraisal requirement for commonly traded cryptocurrencies, reducing costs and administrative burdens for donors.
Additionally, it introduces an option for mark-to-market accounting, letting traders report income based on year-end asset values instead of only at the time of sale.
Senator Lummis had attempted to attach this proposal to broader legislation known as the Big Beautiful Bill, but it was not included before that bill’s passage. A previous version of the bill focused on relieving double taxation on Bitcoin miners.
Public feedback on the bill is now being welcomed.
