Senate Passes Budget Bill Without Crypto Provisions

The U.S. Senate has passed President Trump's extensive budget bill, a significant legislative achievement that marks a major step towards the president's goal of signing the bill into law. The bill, spanning over 1,000 pages, includes permanent extensions of the 2017 tax cuts, substantial reductions in corporate tax rates, and new tax breaks that primarily benefit high-income individuals. Notably absent from the bill are any mentions of digital assets, Bitcoin, Ethereum, crypto, web3, or blockchain. This omission is significant, as it indicates that the Senate did not prioritize regulatory measures or tax provisions related to cryptocurrencies in this legislative package.

The passage of the bill came after a lengthy and contentious process, with Senate Republicans narrowly securing its approval. The bill is now set to move to the House of Representatives for further consideration and potential amendments. The House is expected to adopt the Senate's changes, allowing Congress to send the bill to President Trump for his signature by July 4.

The absence of cryptocurrency-related provisions in the bill is particularly noteworthy given the ongoing debates and discussions surrounding the regulation and taxation of digital assets. Senator Cynthia Lummis, for instance, has been advocating for significant changes to crypto tax policies, including proposals to waive taxes on small crypto transactions below $300 with a $5,000 annual cap. However, these proposals did not make it into the final version of the bill.

Senator Lummis argued that miners and stakers were taxed twice, once when they received block rewards and then again when they had to sell them. Currently, the IRS classifies profits from crypto mining and staking as income, which is taxed at fair market value at the time of receiving them. Once the miners sell their crypto, they have to report capital gains and pay a flat rate on these profits. While these taxes don’t strictly entail double taxation, miners and stakers complain that the system is overly burdensome. Namely, they have to pay taxes before realizing any profits, or before converting any crypto to fiat.

Lummis also advocated for tax exemptions for small crypto transactions, or a “de minimis” rule. These are often transactions that involve small payments for gas fees, small transfers, etc. While transactions don’t generate much tax income, they are a significant burden when it comes to tax reporting.

The lack of mention of cryptocurrencies in the budget bill suggests that lawmakers may be taking a cautious approach to regulating this emerging asset class. It remains to be seen whether future legislative efforts will address the regulatory and tax treatment of digital assets more comprehensively. For now, the focus remains on the broader implications of the budget bill, which includes significant tax cuts and spending measures that are expected to have far-reaching economic impacts.