Senator Lummis Introduces Bill Exempting Small Crypto Transactions From Capital Gains Tax

Senator Cynthia Lummis introduced a bill on Thursday that aims to provide several tax-related benefits to digital asset users. The proposed legislation, known as the Lummis Crypto Tax Bill, includes provisions that would exempt most digital asset transactions under $300 from capital gains tax calculations. This exemption would allow users to make everyday purchases with various tokens without the burden of calculating and paying capital gains taxes. However, there is a $5,000 yearly cap on this exemption, which does not apply to the purchase of cash, cash equivalents such as stablecoins, property used in active business, or property held for income production.

Crypto advocates have long argued that such an exemption could significantly accelerate the mainstream adoption of crypto as a payment method. The bill also includes other tax perks, such as a mark-to-market election that would allow businesses to more easily report unrealized crypto gains on their balance sheets. Additionally, the legislation clarifies that rewards earned through crypto mining or staking should only be taxed when sold off as ordinary income, resolving recent legal disputes over the taxability of staking rewards.

Furthermore, the bill expands existing securities lending rules to include digital assets, making crypto lending a non-taxable event similar to securities lending. It also simplifies the process of donating crypto to charitable causes. A spokesperson for Senator Lummis stated that the exact timeline for introducing the legislation on the Senate floor has not yet been determined. Last month, the Senate passed the GENIUS Act, which establishes a framework for issuing and trading stablecoins in the United States. This bill is expected to see a vote in the House in the coming weeks.

Senator Lummis emphasized the importance of updating the tax code to embrace the digital economy and prevent archaic tax policies from stifling American innovation. She believes that her legislation ensures Americans can participate in the digital economy without inadvertently violating tax laws. The introduction of this bill comes after crypto tax exemptions failed to make it into President Donald Trump’s “Big, Beautiful Bill” earlier this week. The Lummis Crypto Tax Bill aims to secure key victories for the digital asset industry and create a level playing field for digital asset users across the country.