Senator Lummis Proposes Revision of Cryptocurrency Tax Laws to Combat Unjust Tax Regulations
In the rapidly evolving world of cryptocurrencies, Senator Cynthia Lummis, often referred to as Congress's "Crypto Queen," is spearheading a significant push for reform of the current crypto tax policy.
The senator has long advocated for a more balanced approach to taxing digital assets, recognising the need for frameworks that encourage innovation while ensuring fair compliance. This call for reform could have a significant impact on the future of crypto regulation in the U.S.
In mid-2025, Senator Lummis introduced comprehensive digital asset tax legislation aimed at overhauling the tax treatment of cryptocurrencies. The bill seeks to eliminate double taxation on digital assets, introduce a de minimis exemption for small transactions, and address tax issues related to crypto lending by aligning them with the treatment of traditional securities lending.
Key elements of the bill include ending double taxation on cryptocurrency acquisition and sale, introducing a de minimis exemption to exclude small digital asset transactions from taxation, deferring taxation on mining and staking rewards until those rewards are sold, exempting actively traded digital assets from qualified appraisal requirements for charitable contributions, and applying existing tax-code rules for securities lending, wash sales, and mark-to-market treatment to digital assets.
However, the legislation remains in the proposal stage, with no indication it has yet passed Congress. The future landscape of crypto investment and business operations in the U.S. could be significantly shaped by the outcome of these discussions.
Engaging in the legislative process is crucial for all stakeholders involved in the crypto sector. Senator Lummis herself outlined her proposed crypto tax framework at the 2025 Bitcoin Conference.
Meanwhile, the Internal Revenue Service (IRS) classifies cryptocurrencies as property in the United States, and any profitable crypto transaction is subject to capital gains tax. This classification, coupled with the complex and often outdated tax rules, has been a source of contention for many in the crypto community.
The evolving nature of digital assets necessitates adaptive tax frameworks to encourage growth and innovation in the crypto industry. Debates over crypto taxation continue among lawmakers and industry experts, with the IRS recently revoking final regulations on DeFi reporting requirements in July 2025, reflecting a regulatory adjustment concurrent with the legislative efforts.
As the discussions progress, it is clear that the outcome will determine whether the U.S. can foster a thriving digital economy that benefits all participants. Senator Lummis's proposed crypto tax reforms, if passed, would be a significant step towards modernizing and rationalizing tax rules around digital assets to support adoption and innovation.
[1] CoinDesk. (2025). Cynthia Lummis Introduces Comprehensive Digital Asset Tax Legislation. [online] Available at: https://www.coindesk.com/policy/2025/07/26/cynthia-lummis-introduces-comprehensive-digital-asset-tax-legislation/
[2] Blockworks. (2025). Lummis's Digital Asset Tax Bill: What's In It and What Comes Next. [online] Available at: https://blockworks.co/lummi-digital-asset-tax-bill-whats-in-it-and-what-comes-next/
[3] Forbes. (2025). Cynthia Lummis's Crypto Tax Reform Bill: What It Means For Investors. [online] Available at: https://www.forbes.com/sites/jasonbrett/2025/07/26/cynthia-lummis-crypto-tax-reform-bill-what-it-means-for-investors/
[4] Cointelegraph. (2025). Cynthia Lummis Introduces The BITCOIN Act To Establish A Federal Bitcoin Reserve. [online] Available at: https://cointelegraph.com/news/cynthia-lummis-introduces-the-bitcoin-act-to-establish-a-federal-bitcoin-reserve
[5] Decrypt. (2025). Cynthia Lummis Introduces The BITCOIN Act To Establish A Federal Bitcoin Reserve. [online] Available at: https://decrypt.co/91631/cynthia-lummis-introduces-the-bitcoin-act-to-establish-a-federal-bitcoin-reserve
- The bill introduced by Senator Cynthia Lummis in mid-2025, aimed at overhauling the tax treatment of cryptocurrencies, seeks to align digital asset lending issues with the treatment of traditional securities lending.
- In her proposed crypto tax framework, Senator Lummis outlines the need for a de minimis exemption to exclude small digital asset transactions from taxation, reflecting her recognition of the importance of encouraging innovation in the blockchain-based finance industry.
- The magazine Forbes discusses the potential impact of Senator Lummis's proposed crypto tax reforms, suggesting that their passage could markedly facilitate adoption and innovation in the technology sector.
