Senator Lummis Proposes Tax Relief for Crypto Traders and Miners

Senator Cynthia Lummis has proposed an amendment to the controversial reconciliation bill known as the OBBB, or ‘One Big Beautiful Bill’, to offer tax relief to crypto traders and Bitcoin miners. Through an X (formerly Twitter) post on the 30th of June, Lummis pledged to ensure Americans use crypto without worrying about the taxman. She stated, “I am working on an OBBB amendment to ensure Americans can use digital assets without fear of tax violations. More to come soon!”

Lummis decried the current tax regime for ‘double taxation’ of crypto, miners, and validator operators. She stated, “For years, miners and stakers have been taxed TWICE. Once when they receive block rewards, and again when they sell it.” She added that it’s “time to stop unfair tax treatment” to achieve President Donald Trump’s vision of making America the world’s BTC and crypto superpower. Currently, the U.S. Internal Revenue Service (IRS) treats mining, staking, crypto payment receipts, and airdrops as ordinary income and subject to the typical income tax rate. Typical usage like buying a coffee via crypto could trigger a taxable event. On top of that, selling the same assets later incurs capital gains tax—effectively taxing users twice. Lummis’ proposal aims to flip that model: tax only at the point of sale, not on use or receipt.

Michael Saylor, founder of Strategy (formerly MicroStrategy), the leading pioneer in BTC corporate treasury, echoed her stance and said, “We must end unfair taxes on BTC miners if America is going to be the world’s Bitcoin superpower.” In May, Lummis advocated for the dismissal of Biden-era crypto tax rules that would force crypto firms to pay taxes even if unprofitable. Some top crypto advocacy groups backed Lummis’ tax proposal. Coinbase-linked Stand With Crypto urged Congress to ensure Americans use crypto like cash. Summer Mersinger, CEO of Blockchain Association, a collective voice for the crypto sector, said, “By adding the Lummis tax amendment to the Big Beautiful Bill, the Senate can create more fairness and long-term sustainability in our industry.”

Lummis has also been actively advocating for significant changes in the taxation of cryptocurrencies, particularly focusing on providing relief to Bitcoin miners and validators. Her proposed amendments aim to address the issue of double taxation that these entities currently face. By pushing for these changes, Lummis hopes to encourage broader adoption and usage of cryptocurrencies. One of the key proposals by Lummis is to exempt crypto transactions under $300 from taxation, with an annual limit of $5,000. This move is designed to give casual users more flexibility in spending their digital assets without the burden of frequent tax reporting. Additionally, Lummis is advocating for tax credits for Bitcoin miners who use renewable energy sources, promoting sustainable practices within the mining industry.

The proposed amendments also seek to alter the tax treatment of staking and mining rewards. Currently, these rewards are taxed upon receipt and again upon sale, creating a complex and often burdensome tax situation for miners and validators. Lummis' plan would change this by taxing these assets only when they are sold, aligning their treatment with that of other produced goods. This adjustment could significantly boost the profitability and appeal of staking protocols for various cryptocurrencies. However, despite the support from the crypto industry, Lummis' amendment was not included in the recent legislative package. The proposed changes would have waived capital gains taxes on crypto transactions under $300 and altered the tax treatment of staking and mining rewards to be taxed only upon sale. This exclusion has left many in the crypto community disappointed, as they had hoped for much-needed clarity and relief from the current tax regulations.

Lummis' efforts are backed by supporters within the crypto industry, who see her amendments as a crucial step towards integrating digital assets into the mainstream financial system. The proposed changes aim to provide clarity and relief for cryptocurrency miners and stakers, who have long grappled with complex tax regulations. By addressing these issues, Lummis hopes to foster a more favorable environment for the growth and adoption of cryptocurrencies.