New Crypto Tax Bill Introduced By Senator Lummis

TLDR

• Wyoming Senator Cynthia Lummis has introduced a new crypto tax bill.
• It focuses on “common sense” tax rules for digital assets.
• It’s very new — it isn’t even numbered yet.

The digital asset space is breaking barriers with each passing day, but US crypto players have faced a frustrating obstacle for years now – unclear, overly complex…well…pretty much everything. 

Proposed by Wyoming Senator Cynthia Lummis, a new crypto tax bill has been introduced this week, which promises to revolutionize how cryptocurrencies are taxed — making life easier for everyone in the industry.

If you’ve felt bogged down by the current tax chaos or hesitant to jump fully into crypto due to legal uncertainty, this bill could provide the clarity you’ve been waiting for. Let’s get after it.

Why This Bill Matters for Crypto Taxation 

The current US tax code for digital assets feels like it was written for a pre-Bitcoin era. That’s probably because it was written for a pre-Bitcoin era. Small transactions like buying coffee with Bitcoin trigger tax headaches, bridging assets gets taxed needlessly, and outdated rules ignore the unique aspects of everything under the crypto umbrella. 

Senator Lummis recognizes this gap. Her bill proposes practical fixes to align the tax treatment of cryptocurrencies with how they’re actually used in the modern economy. 

What’s in the Lummis Crypto Tax Bill? 

The bill addresses key pain points for crypto users and businesses. Here are its game-changing measures explained: 

Note – For the full draft, go here. 

1. A $300 De Minimis Rule for Crypto Transactions 

Our personal favorite. Put simply, you won’t have to track and report taxes on crypto transactions under $300 (or $5,000 total annually). You can pay for coffee, snacks, or small purchases with Bitcoin or ETH without worrying about IRS paperwork. 

Why it matters: Senator Lummis recognizes that it’s absurd to tax every tiny transaction in daily crypto payments. It encourages crypto adoption as a medium of exchange while removing the compliance nightmare users currently face. 

2. Crypto Lending Won’t Trigger Tax Events 

The bill proposes extending securities lending tax benefits to crypto lending. For example, lending out Bitcoin for interest won’t be taxed as if you’ve sold it, but lenders will need to adjust their basis and report income later when they sell the asset itself.

Why it matters: Encourages the growth of lending markets, which boost liquidity and capital efficiency in the crypto economy. Plus, it removes unfair penalties for legitimate business activities.

3. Wash Sale Rule Closing Loopholes 

Currently, crypto investors can sell assets at a loss, immediately buy them back, and claim that loss as a tax deduction. The new bill fixes this by applying a 30-day wash sale rule, similar to traditional securities. 

Why it matters: By closing this loophole, the legislation aims to create parity between digital assets and traditional asset classes. It’s a step toward fairness while maintaining ethical standards for tax compliance.

4. Mark-to-Market Tax Elections for Crypto Traders 

Active traders can opt for mark-to-market accounting — treating their holdings as if sold at market value at year’s end for tax purposes. 

Why it matters: It enables more accurate tax reporting and enhances cash flow management, particularly for high-frequency traders and businesses involved in cryptocurrency transactions.

5. Fair Treatment of Mining and Staking Rewards 

Second favorite! Mining and staking rewards won’t be taxed until the assets produced are actually sold. Currently, rewards can be taxed immediately as income, creating problems when a reward’s market value falls before it’s liquidated. 

Sorry. What was that? Did you say HODL? Don’t mind if we do…

Why it matters: The provision eliminates the dreaded situation where miners owe money on unsold valuations, smoothing the way for crypto miners and stakers to further innovate.

6. Charitable Contributions Without Appraisal Hassles 

The bill removes appraisal requirements for donations involving actively traded digital assets, similar to public securities. 

Why it matters: Simplifies rules around charitable giving while promoting philanthropy among crypto holders. It’s a win for donors, recipients, and communities.

The Potential Impact on the US Crypto Ecosystem 

As a crypto holder, you may be wondering what these bills actually do for you…and more specifically…your bags. Here are some possibilities.

Boosting Adoption 

New users often hesitate to step into crypto because tax compliance seems like more trouble than it’s worth. By reducing reporting obligations on small transactions, this bill could onboard hundreds of thousands of fresh exit liquidity users. 

Encouraging Innovation 

Businesses — from startups to major players — can operate without fear of absurd tax liabilities stifling product development. The parity between digital and traditional assets removes unnecessary barriers.

Enhancing Global Competitiveness 

With the US trailing global leaders like the UAE in crypto-friendly legislation, this bill positions America as a frontrunner in supporting blockchain technology and financial innovation.

This Bill Has Some Potential 

The Lummis Crypto Tax Bill represents a turning point in digital asset legislation, acknowledging both the promise and practicality of these technologies. It ensures that users, businesses, and governments can all benefit from this growing industry without stalling progress. 

Unfortunately, this thing is hot and fresh off the presses. It doesn’t even have a number yet. We often write about these bills and include their numbers that start with S.B. or H.B.

So if the bill does see the light of day, it probably won’t happen this year. But it’s worth keeping an eye on, and we’ll be updating coverage as the news breaks.