Senator Cynthia Lummis has introduced a new bill in the U.S. Senate to reform the way cryptocurrencies and other digital assets are taxed. The bill, “To amend the Internal Revenue Code of 1986 to reform the treatment of digital assets,” proposes a number of significant changes that would be positive for regular crypto users and investors.
One of the key highlights of the bill is a $300 de minimis exception. This is such that if consumers use cryptocurrency to spend on small purchases less than $300, they would not have to report it for tax purposes. This is to promote the routine use of cryptocurrencies without generating cumbersome tax documentation for minor purchases.
Senator Lummis recently spoke out against the double taxation on crypto miners and stakers. She called it unfair and harmful to U.S. crypto leadership. Right now, miners and stakers are taxed twice. The bill would eliminate double taxation on crypto earned through mining or staking. Under this bill, they are taxed only when they sell or exchange the tokens.
In addition, the bill also adds a new formal definition of “digital asset” in the tax code. This is particularly valuable because newer token forms, like NFTs and stablecoins, are increasingly coming into existence.
Senator Lummis’ bill also aims at antiquated tax regimes, like wash-sale rules that can be challenging to impose on crypto because of the 24/7 crypto trading climate. The objective is to modernize the system so that it can keep up with the reality of the crypto market.
Senator Lummis hopes to get support from both Republicans and Democrats. She says that better crypto tax laws will help keep innovation in the U.S., as other countries move forward with their own crypto rules.
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