Senator Lummis Proposes Tax Reform Bill for Bitcoin and Crypto

Senator Cynthia Lummis, a Wyoming Republican, introduced new legislation on Thursday to overhaul the tax treatment of digital assets, aiming to eliminate policies she views as barriers to innovation. The bill, which closely mirrors provisions she recently attempted to include in a broader legislative package, seeks to modernize the U.S. tax code to better accommodate the growing crypto market. Lummis emphasized that outdated tax rules should not impede American participation in the digital economy, and her proposal is designed to ensure compliance without stifling growth.

The legislation comes as part of Lummis’ ongoing advocacy for crypto-friendly policies, reflecting her belief that clear and fair regulations are essential for the industry’s success. She has invited public feedback on the bill, signaling an intent to refine it before it reaches the President’s desk. This move underscores her commitment to fostering an environment where digital assets can thrive while addressing practical concerns for everyday users.

Key Provisions and Industry Impact

The proposed bill includes several measures to streamline tax obligations for crypto users, with a focus on reducing compliance burdens. One significant provision would eliminate the double taxation of miners and stakers, a practice that Lummis argues unfairly penalizes those securing blockchain networks. Additionally, the legislation introduces a $300 transaction threshold for tax exemptions, meaning small-scale transactions, such as using Bitcoin to buy coffee, would not trigger tax reporting requirements. This threshold aims to balance usability with regulatory oversight, recognizing the challenges of tracking every minor digital asset transaction.

Lummis’ bill has garnered support from crypto advocates who see it as a step toward practical and innovation-friendly tax policies. The senator previously sought to include these provisions in the One Big Beautiful Bill Act, a larger reconciliation package backed by President Trump that remains under consideration in Congress. Despite her efforts, the crypto tax amendment was excluded during a lengthy voting process on various amendments, prompting Lummis to reintroduce the measures as standalone legislation. The decision to move forward independently highlights her determination to address what she calls “archaic” tax policies.

The crypto industry has long faced uncertainty due to complex and inconsistent tax guidelines, which can discourage adoption and innovation. By proposing a $300 exemption threshold, Lummis’ bill acknowledges the impracticality of expecting users to report every small transaction, a requirement that could overwhelm both individuals and tax authorities. This provision could make digital assets more viable as a medium of exchange, encouraging their use in everyday commerce. Furthermore, ending double taxation for miners and stakers could provide relief to key players in the blockchain ecosystem, potentially attracting more investment to the U.S.

Lummis’ legislation arrives at a time when the digital asset market is gaining mainstream traction, with businesses and consumers increasingly integrating cryptocurrencies into their financial activities. Her push for reform aligns with broader efforts to establish the U.S. as a leader in blockchain technology, competing with jurisdictions that have already implemented crypto-friendly regulations. The bill’s focus on practical solutions, such as the transaction threshold, could resonate with lawmakers seeking to support innovation without compromising fiscal responsibility.

As Congress considers this legislation, the crypto community is likely to rally behind Lummis’ efforts, viewing the bill as a critical step toward regulatory clarity. The senator’s invitation for public comments suggests an openness to collaboration, which could strengthen the bill’s chances of gaining bipartisan support. If successful, the legislation could set a precedent for future reforms, positioning the U.S. to capitalize on the economic potential of digital assets while ensuring a fair and manageable tax framework.