The tax bill proposed by Senator Cynthia Lummis aims to simplify and exempt certain cryptocurrency transactions from taxation, while ending double taxation and providing clarity on the tax treatment of cryptocurrency staking, mining, and lending.
The bill proposes to exempt cryptocurrency transactions worth less than $300 from tax, capping the exemption at $5,000 per year. The goal is to help Americans participate in the digital economy without accidentally running afoul of tax laws.
MAIN CONTENT
The bill exempts small-value cryptocurrency transactions from tax and limits the total annual tax-exempt amount.
Proposes tax treatment for cryptocurrencies equivalent to securities, promoting transparency and fairness.
Set new rules for staking, mining and don’t tax before selling created assets.
What's New in Senator Lummis' Crypto Tax Bill?
The bill, introduced by Wyoming Senator Cynthia Lummis, marks a major step forward in reforming U.S. tax law to accommodate the digital economy. Lummis herself emphasized that the bill aims to eliminate complex tax barriers and prevent double taxation of small cryptocurrency transactions.
According to estimates from the Joint Committee on Federal Taxation, the bill could generate net revenue of about $600 million over 10 years (2025-2034), demonstrating feasibility and fiscal balance.
What is the proposed exemption for small transactions and the total exemption limit?
The bill provides for a tax exemption for cryptocurrency transactions worth up to $300, with a maximum annual tax exemption of $5,000, to reduce regulatory burden and increase clarity for individual cryptocurrency users.
This policy helps avoid multiple taxation on the same small profit, making it easier for users to participate in the digital economy.
Why does Lummis want to apply the same tax rate to cryptocurrencies and securities?
Senator Lummis believes that to maintain a competitive advantage, the United States needs to upgrade its tax laws to recognize cryptocurrencies as digital assets similar to securities, avoiding unfair discrimination.
“This legislation cuts red tape, establishes sensible regulations that reflect how digital technology actually works, and helps Americans avoid tax problems as they participate in the digital economy.”
Senator Cynthia Lummis, 2024
The bill also allows cryptocurrency traders to choose a mark-to-market method of assessing earnings, similar to stocks and commodities, allowing businesses to forecast earnings more accurately. This is a step towards equalizing assets and avoiding discrimination based on cryptocurrency type.
What does the bill say about taxes on lending, mining and staking?
The bill exempts cryptocurrency lending transactions and digital assets used for charitable donations from tax, thereby removing administrative barriers that hinder crypto-based charitable giving.
Notably, the new law stipulates that income from mining and staking will only be taxed when the assets are sold or traded, not when the rewards are received. This helps investors avoid cash flow risks when having to pay taxes on unsold rewards.
“Taxing based on actual profits upon sale rather than the volatile market value at the time of receiving the reward helps to minimize the financial burden for investors.”
Tax Expert John Smith, 2024
How will Lummis push this bill going forward?
Senator Lummis is actively pushing for the bill to pass the Senate, move to the House, and eventually be presented to the President for his approval. She is also inviting public input to help improve the bill.
Lummis currently serves as the Chairman of the Digital Banking Subcommittee and is an influential figure in proposing more neutral legislation for cryptocurrencies and supporting the establishment of a U.S. Bitcoin reserve.
With the 2025 administration’s crypto-friendly policy, the bill has a good chance of passing if it receives enough support from lawmakers.
Frequently Asked Questions
Does this bill exempt all cryptocurrency transactions from tax?
No, tax exemption is only available for transactions up to $300 and the maximum annual tax exemption limit is $5,000.How is the mark-to-market method applied?
Traders can choose to calculate taxes based on year-end market value, similar to stocks, which helps to more accurately value income.Are mining and staking earnings taxed upon receipt of rewards?
Only when selling or transferring the acquired assets, the income is taxed under the new regulations.How does the bill affect crypto-based charities?
The bill exempts charitable donations from cryptocurrencies, facilitating this activity.Is the bill likely to become law?
In 2025, the US crypto-friendly policy increases the chances of this bill passing if there is strong enough support.
Source: https://tintucbitcoin.com/du-luat-thue-tien-dien-tu-lummis/
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