Senator Lummis Proposes $600 Million Crypto Tax Reform

Senator Cynthia Lummis has introduced new legislation aimed at modernizing the tax rules for digital assets, which could potentially generate approximately $600 million in revenue from 2025 to 2034. The proposed bill seeks to simplify the tax landscape for cryptocurrency holders by exempting transactions under $300 from capital gains tax. This exemption applies to both the transaction value and the total gain, with an annual cap of $5,000 and adjustments for inflation starting in 2026.

The legislation also proposes that cryptocurrency obtained through mining or staking will only be taxed when it is sold or exchanged, rather than when it is received. This change is designed to reduce the tax burden on crypto users and encourage broader participation in the digital economy. Additionally, the bill includes provisions to apply current securities lending rules to digital assets, establish a 30-day wash sale rule for crypto transactions, and allow traders and dealers to opt for mark-to-market treatment.

Senator Lummis emphasizes the importance of updating the tax code to ensure the United States remains competitive in global finance and innovation. She describes the legislation as groundbreaking, noting that it is fully funded and aims to eliminate bureaucratic obstacles while creating practical rules that align with the realities of digital technologies. The proposed changes are intended to foster a more favorable environment for cryptocurrency users and investors, potentially driving further growth and adoption in the digital asset space.