Senate Approves Trump's Bill - Exempting Bitcoin Taxations Discarded
In a bid to modernise the U.S. tax code and address what she views as unfair double taxation of digital assets, Senator Cynthia Lummis (R-WY) sought to incorporate several key crypto tax provisions in the U.S. Senate's reconciliation bill. Lummis' proposals focused on ending double taxation on crypto mining and staking rewards, and creating exemptions for small transactions to promote mainstream adoption.
The specific elements she tried to include were:
* A $300 de minimis exemption on individual crypto transactions, meaning transactions under this threshold would be exempt from capital gains tax. * A $5,000 annual cap on total tax-free activity related to digital assets, offering further tax relief within a reasonable limit. * Changes to how mining and staking rewards are taxed: instead of taxing miners and stakers both at the time of receiving block rewards or staking income and again when they sell those assets, her proposal aimed to tax these rewards only at the point of sale. * A call to revise the term "broker," which was defined under the 2021 Infrastructure Investment and Jobs Act to include miners and developers, requiring them to report detailed user data and increasing their tax obligations. Lummis advocated for exemptions for non-custodial actors like developers and protocol operators. * Expanding securities lending rules to explicitly cover digital assets, bringing clarity to how crypto lending activities are taxed.
Senator Lummis characterised reconciliation as the best legislative vehicle to pass these changes, which require only a simple majority, to "fix crypto provisions that unfairly double tax bitcoin and digital assets" and to modernize the antiquated U.S. tax code to foster growth in the crypto industry.
Despite Lummis' efforts, the crypto tax amendment did not make it into the "Big, Beautiful Bill" that was passed by the U.S. Senate. Crypto policy leaders and Senator Lummis have expressed disappointment over the outcome, considering it a "missed opportunity" for the industry. The U.S. Senate passed President Donald Trump's reconciliation bill on Tuesday. A flurry of activity occurred on Monday to get the crypto amendment to the Senate floor, but unfortunately, the clock ran out, preventing its inclusion in the bill.
- Senator Lummis proposed a $300 de minimis exemption on individual crypto transactions to exempt small transactions from capital gains tax.
- Lummis also proposed a $5,000 annual cap on tax-free digital asset activities, offering further tax relief within a reasonable limit.
- Her proposals aimed to change how mining and staking rewards are taxed, suggesting that these rewards should be taxed only at the point of sale.
- Lummis advocated for exemptions for non-custodial actors like developers and protocol operators, who were previously defined as "brokers" under the 2021 Infrastructure Investment and Jobs Act.
- Senator Lummis sought to expand securities lending rules to explicitly cover digital assets, bringing clarity to how crypto lending activities are taxed.
- Despite Lummis' efforts, the crypto tax amendment did not make it into the U.S. Senate's reconciliation bill, which was passed by the Senate on Tuesday, resulting in disappointment among crypto policy leaders and Senator Lummis.
