Senator Lummis and Saylor Push for Bitcoin Tax Reform to Boost US Crypto Sector

Senator Cynthia Lummis and MicroStrategy Chairman Michael Saylor are spearheading an initiative to reform the taxation of Bitcoin miners and stakers in the United States. The current tax system imposes double taxation on mining and staking rewards, treating them as immediate income and then taxing them again as capital gains when sold. This dual taxation system is seen as a significant barrier to innovation and is driving crypto businesses to operate overseas.

Lummis argues that this approach is inconsistent with how traditional businesses are taxed and creates liquidity issues for miners, particularly during bear markets when asset values decline after rewards are issued. The proposed legislation aims to address these issues by changing the timing and method of taxing rewards. Instead of taxing rewards upon receipt, miners and stakers would only owe taxes when they sell or convert those assets. A key component of the plan is a $300 de minimis threshold, which exempts rewards worth less than this amount from immediate taxation.

This reform is intended to simplify the tax process, reduce paperwork, and alleviate the burden on small-scale miners and validators. By aligning U.S. crypto tax rules with international standards, the country could become more competitive in the global crypto sector. The move is seen as a way to restore U.S. leadership in blockchain innovation, as other countries like El Salvador, the UAE, and Singapore offer more favorable conditions for miners.

Michael Saylor, a prominent Bitcoin advocate, emphasizes that this tax reform is crucial for the U.S. to maintain its position at the forefront of blockchain technology. Senator Lummis echoes this sentiment, stating that clear tax policies will attract investment and talent, securing the nation’s role in the future of digital finance. Removing double taxation would make the U.S. a more attractive hub for crypto operations, potentially creating jobs and boosting economic growth.