Lummis Unveils Standalone Crypto Tax Bill to Spark Adoption

Key Provisions of the Lummis Digital Asset Tax Bill

The heart of Lummis’s proposal is a $300 exemption for small transactions such as buying coffee with Bitcoin that don’t trigger capital gains tax, with an annual cap of $5,000. Modeled after exchange-rate tax rules, this provision acknowledges the impracticality of micro-tracking every crypto spend.

Adjustments for inflation begin in 2026, and related transactions are aggregated to prevent misuse.

Advocates view this as a move to foster everyday crypto use. Industry voices, however, argue the thresholds are too low. Some push for a $600 or even uncapped limit to match fiat spending norms. Still, it’s a concrete step toward simplifying tax compliance.

Current law taxes mining and staking rewards as income when issued, before any sale, resulting in “double taxation” when each subsequent sale triggers capital gains. Lummis’s bill tackles this by deferring tax recognition until the asset is sold, aligning with how traditional securities are treated and easing cash-flow pressures on miners and validators.

To streamline DeFi activity, the legislation extends securities‑lending rules to digital assets: loans aren’t taxed at transfer, only on basis adjustments and income assigned to lenders. This parity removes friction for both institutional and retail users engaging in crypto lending.

The bill also brings crypto in line with traditional financial frameworks:

1. Wash‑sale rules: 30‑day wash‑sale restrictions now apply to crypto asset sales.
2. Mark‑to‑market election: Traders and dealers can elect, or must use, depending on status, to mark holdings at year‑end market value.
3. Charitable donations: No appraisal required for donated, actively traded digital assets, treated like publicly listed securities.

These steps aim to eliminate inconsistencies in the tax code and bring crypto on par with stocks and bonds.

The Congressional Joint Committee on Taxation projects $600 million in net revenue from 2025–2034, meaning the bill is effectively revenue‑neutral. Lummis highlights that such funding supports the legislation without expanding deficits.

Context & Next Steps

This standalone bill follows larger crypto efforts stalled in the Senate:

1. Lummis’s amendment was not included in the OBBB.
2. Related proposals—the CLARITY Act (market structure) and GENIUS Act (stablecoin regulation) are advancing in parallel.
3. Earlier bills, like the 2024 Bitcoin Reserve Act, reflect Lummis’s longstanding crypto advocacy.

Now, she seeks public feedback during the comment period as the bill enters the legislative process. With limited Senate floor time and competition for legislative attention, passage is challenging, but the standalone focus could increase momentum.

The industry response has been mixed. Supporters praise Lummis for cutting red tape and improving usability. Critics argue the thresholds remain too cautious. Notable voices include Bitcoin Magazine’s Trey Walsh, calling the proposal “very cool” but urging higher limits, or none at all, for real impact. Policy analysts like Nick Anthony of CATO Institute’s Center for Monetary and Financial Alternatives suggest inflation adjustments coupled with expanded caps.

If passed, Lummis’s bill would represent the most comprehensive overhaul of crypto taxation since digital assets gained mainstream exposure. Its tailored approach addresses everyday use, income from DeFi, compliance burdens, and fairness, without increasing tax liability overall.

By aligning with how traditional assets are treated and simplifying small transactions, the bill could significantly enhance user adoption, reducing friction and promoting innovation. It also sends a signal that the U.S. is ready to integrate cryptocurrencies within its financial system responsibly.

Bottom Line:

Senator Cynthia Lummis’s standalone crypto tax bill marks a pivotal moment. It scopes into everyday crypto use, staking and mining dynamics, lending mechanics, and fair treatment, all under a fully funded framework projected to raise $600 million over a decade.

As it enters the comment phase, lobbying and public interest may shape whether this marks the start of a sweeping crypto tax reform or a missed opportunity for broader tax modernization.