Senator Cynthia Lummis Unveils Standalone Crypto Tax Reform Bill
U.S. Senator Cynthia Lummis has introduced a draft bill aimed at reshaping the country’s digital asset tax framework. The proposal comes after efforts to include cryptocurrency-related amendments in the recent federal budget package fell short. This standalone bill is now Lummis’ flagship attempt to deliver on her promise to the crypto community, offering comprehensive tax clarity and support for blockchain innovation.
A key highlight of the proposed legislation is the introduction of a de minimis exemption for digital asset transactions. Under this provision, capital gains on transactions valued at $300 or less would be exempt from taxation, with an annual cap of $5,000. The goal is to simplify small-scale crypto transactions, such as using digital currencies for daily purchases, and prevent users from facing tax liabilities for minimal gains.
The bill also outlines additional provisions that could significantly benefit the crypto ecosystem. It seeks to exempt crypto lending agreements and charitable contributions made using digital assets from tax obligations. Furthermore, it proposes that taxes on mining and staking rewards be deferred until the digital assets are sold, offering a more practical approach to how these earnings are taxed.
“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,” said Senator Lummis. “We cannot allow our archaic tax policies to stifle American innovation. My legislation ensures Americans can participate in the digital economy without inadvertent tax violations.”
With the recent spending bill passing without addressing digital assets, Lummis’ standalone draft is considered the most viable route to implement much-needed regulatory updates. It signals her continued commitment to promoting U.S. leadership in blockchain and crypto finance.
Ongoing Challenges with U.S. Crypto Taxation Policies
The issue of digital asset taxation remains a major pain point for U.S. investors, developers, and users. Critics argue that current policies are outdated and do not accommodate the complexities of decentralized finance (DeFi) and blockchain technologies. Double taxation, vague reporting rules, and the lack of specific guidance have left many stakeholders in regulatory limbo.
A central concern is how DeFi protocols and non-custodial platforms—where developers do not control user funds or consensus mechanisms—are treated under existing tax and financial laws. Unlike centralized exchanges, these platforms operate without a traditional business structure, making compliance with current tax reporting rules challenging and often impractical.
In June 2025, members of the House Financial Services Committee proposed an amendment to the Digital Asset Market Clarity Act of 2025. The amendment aims to exempt developers of fully decentralized protocols from being classified as money transmitters, a designation that would subject them to extensive regulatory oversight and tax reporting requirements similar to those imposed on centralized crypto businesses.
As lawmakers work to finalize the upcoming federal spending bill, there is mounting pressure to include clear and fair provisions related to digital assets before it reaches President Donald Trump’s desk. The outcome could shape the future of crypto regulation in the United States and determine whether innovation will flourish or falter under the weight of regulatory uncertainty.
