Senator Lummis Proposes Crypto Tax Bill to Shield Micro-Payments and Validation Rewards

Senator Cynthia Lummis has introduced a bill aimed at clarifying cryptocurrency taxation by inserting statutory definitions for digital assets into the Internal Revenue Code. The legislation classifies cryptographically recorded units of value as property unless they mirror traditional financial instruments, providing much-needed regulatory clarity.

A key provision excludes gains or losses from token-based transactions under $300, with annual caps set at $5,000. Treasury will adjust these thresholds for inflation post-2026, while taxpayers must maintain segregated records for eligible activities. The bill sunsets after 2035, creating a defined window for crypto adoption under these rules.

Lummis frames the proposal as cutting through bureaucratic red tape, enabling Americans to participate in the digital economy without fear of inadvertent tax violations. The fully-funded bill expands securities-lending SAFE harbors to include specified digital assets, signaling growing institutional recognition of cryptocurrency markets.