US Senator Cynthia Lummis has submitted a draft bill, outlining several provisions to overhaul the tax code and exempt certain crypto transactions from taxation. This will end double taxation and add clarity to the tax treatment of crypto staking, mining, and lending transactions.
The bill proposes an exemption for crypto transactions and capital gains of $300 or less, with a $5,000 annual exemption cap. “My legislation ensures Americans can participate in the digital economy without inadvertent tax violations,” Lummis said.
In addition, the legislation is estimated by the Congressional Joint Committee on Taxation to generate approximately $600 million in net revenue between 2025-2034.
The standalone draft bill is now the Wyoming Senator’s best chance of passing the pro-crypto legislation promised to the crypto community. This is after the Senators passed the spending bill without addressing the crypto market.
Lummis asks for the same tax treatment as securities
According to Lummis, to maintain our competitive edge, the US must change the tax code to embrace the digital economy, not burden digital asset users.
She said, “This groundbreaking legislation is fully paid-for, cuts through the bureaucratic red tape, and establishes common-sense rules that reflect how digital technologies function in the real world. We cannot allow our archaic tax policies to stifle American innovation, and my legislation ensures Americans can participate in the digital economy without inadvertent tax violations.”
She introduced a section that would allow dealers and traders in digital assets to elect mark-to-market treatment. This means that dealers and traders will get the same tax treatment as dealers and traders of stocks and commodities.
This stops unfair discrimination based on asset type. The election makes it possible for businesses to recognize income more accurately, so it fits with how the economy really works, while still staying in line with current tax policy.
The Wyoming Senator also outlined provisions to exempt crypto lending agreements and digital assets used in charitable contributions from taxation.
This rule gets rid of an unnecessary bureaucratic hurdle that has discouraged charitable giving of digital assets, even though these assets often have readily determinable fair market values through active trading.
In addition, the bill introduces a new section stating that mining and staking income should not be recognized until the sale/disposition of produced assets and that they should be treated as ordinary income when recognized.
This allows the taxation of mining and staking rewards to be taxed based on how much economic gain they actually bring in, instead of relying on the unstable and often uncertain fair market value at the time of receipt. This method keeps investors from having cash flow problems when they owe taxes on things they haven’t sold and might not be able to quickly sell.
Lummis is set to push the bill to Trump’s office
The BTC evangelist is pushing to get the crypto tax bill approved by the Senate and pushed to the House, and eventually to Trump in the near future. She said, “I welcome public comments on this legislation as we seek to get this package to the President’s desk.”
Senator Lummis was chosen to lead the Senate Banking Subcommittee on Digital Assets earlier this year. She has pushed for a number of crypto-related laws that would loosen the rules on the sector, including debanking. She is one of the biggest supporters of setting up a US Bitcoin reserve through the Treasury.
Previously, crypto legislation such as this would crash and burn upon voting. However, the new administration has been far more crypto-friendly in 2025. Therefore, there is a high chance that the bill could see support and approval from the Senate and House if it gets enough support.
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