• Senator Cynthia Lummis proposed a draft bill introducing a $300 de minimis tax exemption on crypto transactions, capped at $5,000 annually.
  • The bill seeks to defer taxes on mining and staking rewards until the assets are sold and exempts crypto used in charitable donations.

US Senator Cynthia Lummis of Wyoming has introduced a standalone draft bill to reform how digital assets are taxed in the United States.

The move comes after efforts to include crypto-related provisions in the national budget package fell through. The bill outlines several key reforms, aiming to end double taxation and provide much-needed clarity around crypto-related activities such as staking, mining, and lending.

A major feature of the proposed bill is the introduction of a de minimis exemption. Under the new framework, digital asset transactions and capital gains of $300 or less would be exempt from taxation, with an annual cap set at $5,000.

The bill also proposes exemptions for digital assets used in charitable contributions and for crypto lending agreements.

In a significant change, taxes on mining and staking rewards would be deferred until the assets are sold, potentially relieving taxpayers from premature obligations.

Senator Lummis emphasised the practical nature of the legislation, stating:

“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. My legislation ensures Americans can participate in the digital economy without inadvertent tax violations.”

The lack of clear tax guidance continues to frustrate investors, traders, and users in the crypto space. One unresolved issue is how decentralised finance (DeFi) protocols are taxed, especially when developers don’t control user funds or the platform’s operations.

As lawmakers work to include crypto provisions in the broader spending bill, Lummis's standalone proposal remains a pivotal step toward regulatory clarity.

Edited by Annette George