Washington Is Seeing Crypto-Level Volatility

TLDR

• Senator Lummis has announced that she will not seek reelection.
• A new bill in the House proposes a tax exemption on small stablecoin payments.
• The bill also seeks to allow deferral of staking rewards.

Prices go up fast and down even faster. As crypto users, we know that’s the world we live in. But when volatility hits politics, our eyebrows shoot up, especially when there’s crypto involved.

The halls of Congress are typically known for slow-moving legislation and predictable outcomes, but recent weeks have introduced a level of unpredictability usually reserved for the crypto markets themselves. From surprising retirements to ambitious new tax proposals, Washington’s approach to digital assets is undergoing a shake-up.

For newcomers to the crypto space, these political shifts might seem distant, but they signal major changes in how digital currency could be treated, taxed, and regulated in the United States over the coming years.

Lummis Leaves the Legislature

This one made us sad in our hearts and hit us right in the feels. Senator Cynthia Lummis (R-WY), often dubbed the “Crypto Queen” of Congress for her staunch advocacy of Bitcoin and digital assets, has announced she will not seek reelection in 2027. This move marks the upcoming departure of one of the industry’s most powerful allies on Capitol Hill.

In a candid statement on X, Lummis expressed that despite her devotion to legislation, the physical and mental toll of the job has become unsustainable. “I feel like a sprinter in a marathon,” she wrote, noting that she does not have “six more years” left in her to serve another term.

Source

Lummis has been instrumental in crafting legislation to integrate digital assets into the US financial system. Her departure in 2027 raises questions about who will pick up the torch for pro-crypto legislation in the Senate Banking Committee, a crucial battleground for financial regulations.

A New Proposal for Crypto Taxes

While Lummis prepares for her exit, other lawmakers are introducing legislation that could simplify life for everyday crypto users. Representatives Max Miller (R-OH) and Steven Horsford (D-NV) have introduced a discussion draft to modernize the tax code for digital assets.

Currently, every time you spend cryptocurrency — even just buying a cup of coffee — it is technically a taxable event involving capital gains or losses. This new proposal seeks to change that by introducing a “de minimis” exemption.

The $200 Stablecoin Exemption

The core of the Miller-Horsford proposal focuses on “regulated payment stablecoins”. Under this draft bill, users would no longer need to report gains or losses on stablecoin transactions of up to $200.

To qualify, the stablecoin must be:

• Pegged strictly to the US dollar.
• Issued by a permitted issuer.
• Maintained within a tight trading range (between $0.99 and $1.01).

The change aims to treat small crypto transactions more like using foreign currency for small purchases, rather than complex investment trades. That effectively removes the headache of calculating tax liabilities for routine purchases made with digital dollars.

Relief for Miners and Stakers

The draft legislation also tackles the issue of “phantom income” for miners and stakers. Under current rules, rewards from mining or staking are often taxed immediately upon receipt, regardless of whether the asset has been sold or converted to cash.

The new bill proposes a deferral option that allows taxpayers to delay recognizing income from these rewards for up to five years. Income would eventually be recognized at the asset’s fair market value, taxed as ordinary income, with subsequent appreciation treated as capital gains.

A Bittersweet Week in Washington

These developments represent a volatile yet pivotal moment for crypto policy in the United States. The potential loss of Senator Lummis removes a veteran voice from the Senate, but the bipartisan introduction of practical tax reforms suggests that cryptocurrency is becoming a normalized topic in Washington.

As the Miller-Horsford draft moves through the legislative process, it faces technical drafting reviews and debates regarding anti-abuse rules. However, the intent is clear: to transition crypto from a purely speculative asset class to a functional part of everyday life.