- Wyoming Senator introduces comprehensive crypto tax reform addressing compliance.
- The $300 de minimis rule eliminates taxation on small digital asset transactions.
- Mining and staking income are deferred until the actual sale of produced assets occurs.
Senator Cynthia Lummis of Wyoming has introduced comprehensive digital asset tax legislation aimed at creating practical rules for cryptocurrency users while generating $600 million in federal revenue over the next decade. The bill addresses multiple taxation issues that have created compliance burdens for ordinary digital asset users.
The bill sets a $300 de minimis rule for digital asset transactions, consistent with foreign exchange regulations. The provision eliminates the tax reporting requirement for small buys such as buying coffee with Bitcoin, as long as transactions do not exceed the level or involve cash equivalents.
The bill permits annual caps that limit total excluded gains to $5,000 per taxpayer, adjusted for inflation after 2026. Related transactions need to be aggregated under the draft rules to prevent abuse without diminishing the rules’ practical applicability to ordinary digital asset costs.
Mining and Staking Rules Align With Economic Reality
The legislation defers income recognition for mining and staking activities until taxpayers actually sell or dispose of the digital assets they have produced. This approach prevents situations where individuals owe taxes on volatile assets they haven’t liquidated and may struggle to convert to cash.
Digital asset lending is treated similarly to securities lending under the proposed framework. Temporary lending arrangements won’t trigger immediate tax consequences, encouraging legitimate lending markets without creating artificial barriers to capital efficiency.
The law extends wash sale provisions to virtual currency and closes a loophole that allowed cryptocurrency investors to use tax-loss harvesting techniques unavailable to investors in traditional securities. The 30-day rule will be applied uniformly across asset classes.
Mark-to-market elections are offered to digital asset dealers and traders, on par with treatment given to securities and commodities professionals. Dealers are subject to mandatory application, while traders can adopt the treatment on a voluntary basis for actively traded digital assets.
New Legislation Terminates Most Provisions
Charitable contribution rules are modified to exclude actively traded digital assets from qualified appraisal rules. This change reduces donor administrative expenses when donating appreciated cryptocurrency to charity.
The legislation terminates most provisions on December 31, 2035, establishing a sunset clause that allows for a future evaluation of the tax framework’s effectiveness. Implementation begins with transactions entered after December 31, 2025, providing transition time for taxpayers and tax professionals.
Senator Lummis emphasized that archaic tax policies should not stifle American innovation in the digital economy. The bill aims to create common-sense rules that show how digital technologies function while maintaining appropriate tax compliance requirements.
Related: The Most Important Part of Trump’s ‘Big, Beautiful’ Tax Bill for the Crypto Industry
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