Senator Cynthia Lummis Revives Crypto Tax Reform With New Standalone Bill

One of the bill’s most notable proposals is the introduction of a de minimis exemption for crypto transactions. Under current U.S. tax rules, every crypto-to-fiat or crypto-to-crypto trade is a taxable event, no matter how small. This has long been a source of frustration for users who make routine purchases using cryptocurrencies, such as buying a cup of coffee or groceries. The bill seeks to resolve this by exempting capital gains taxes on individual crypto transactions under $300, with a maximum annual threshold of $5,000. This change would dramatically reduce the complexity and compliance burden on users engaging in low-value transactions and is seen as a practical step toward integrating crypto into everyday commerce.

The second major reform targets how mining and staking rewards are taxed. Currently, the Internal Revenue Service (IRS) requires recipients of such rewards to report them as ordinary income upon receipt, even if the assets are not sold. Critics argue that this results in taxation of unrealized gains, particularly problematic in volatile markets where the value of the reward could drop before a user liquidates it.

Senator Lummis’s proposal defers taxation until the crypto assets are sold, aligning the tax treatment with how capital gains are traditionally handled in other asset classes. This shift could benefit both retail users and institutional validators participating in proof-of-stake or mining networks.

The third component of the bill focuses on charitable giving involving cryptocurrencies. While donating appreciated crypto assets to charity can be tax-efficient, existing laws require donors to obtain a formal appraisal for contributions exceeding $5,000. The bill eliminates this appraisal requirement, treating cryptocurrency donations similarly to publicly traded stock. By reducing administrative burdens, the legislation could encourage more philanthropic activity in crypto and enhance transparency in nonprofit funding streams.

This legislative push comes after the failure to include any crypto-related provisions in the latest federal budget package. Despite heavy lobbying, the final text of President Trump’s “One Big Beautiful Bill” did not incorporate any language from the Lummis-Gillibrand crypto framework, nor did it address taxation or reporting rules specific to digital assets. Lawmakers familiar with the process noted that political timing and competing priorities left little room for narrower provisions, including those related to crypto.

Senator Lummis, who co-authored the bipartisan Responsible Financial Innovation Act alongside Senator Kirsten Gillibrand (D-NY), has long championed legislative clarity in digital finance. Her latest bill reaffirms that commitment and offers a targeted approach to specific pain points voiced by both users and regulators. By decoupling these reforms from broader legislative packages, the strategy could potentially expedite their passage, especially if bundled with other tax measures in upcoming budget negotiations.

Still, the bill’s passage is far from guaranteed. With Congress entering an election-heavy second half of the year and major legislative bandwidth consumed by appropriations and immigration reform, the standalone nature of the bill may limit its momentum. However, it could serve as a foundational text for future tax packages or find its way into the next round of economic legislation, particularly if the industry continues to pressure lawmakers for clearer guidance.

While regulatory clarity remains a moving target, Senator Lummis’s effort marks another step toward normalizing digital assets within the broader U.S. financial system.