Senator Cynthia Lummis has taken a bold step in the ongoing effort to modernize crypto regulations with the introduction of a comprehensive new tax reform bill aimed at digital asset users, miners, and innovators. The bill, officially submitted to the U.S. Senate, seeks to overhaul what Lummis describes as outdated and unfair tax policies that currently burden the fast-evolving crypto sector. With this legislation, Lummis intends to remove major roadblocks for the everyday use of cryptocurrencies like Bitcoin, making it easier for Americans to participate in digital finance while supporting blockchain innovation.

A major highlight of the bill is a new exemption for small crypto transactions. Currently, even minor uses of cryptocurrencies—such as buying coffee or groceries—can trigger tax liabilities due to the way gains are calculated on every transaction. This has long discouraged practical use of digital assets for everyday purchases. Lummis’s proposal introduces a tax exemption for individual crypto transactions of up to $300. Additionally, these gains are capped at $5,000 annually to prevent abuse. Starting in 2026, the $300 threshold would adjust automatically for inflation, ensuring the exemption remains relevant over time. This seemingly simple change could significantly reduce the complexity of tax reporting for casual crypto users and make using crypto for small purchases as easy as swiping a debit card.

Another crucial aspect of the bill addresses the tax treatment of crypto mining and staking. Under the current rules, individuals and companies are required to report income and pay taxes at the moment they receive crypto tokens from mining or staking, regardless of whether those tokens are sold. This often results in people paying taxes on assets they haven’t liquidated, leading to potential cash flow problems and unfair tax burdens. The proposed bill changes this by taxing mining and staking rewards only when the assets are actually sold or used. This ensures that tax liabilities arise only after the crypto is turned into spendable funds, aligning crypto taxation more closely with common-sense business practices.

The legislation also includes important provisions for crypto lending. At present, lending digital assets can be treated as a taxable event, similar to selling them. Lummis’s bill proposes extending the same tax deferral benefits available to traditional stock lending arrangements to crypto lending. This would mean that temporarily lending crypto—such as when providing liquidity or staking via decentralized finance (DeFi) protocols—would not be considered a taxable sale, thereby making participation in crypto finance less risky from a tax standpoint.

In an effort to promote charitable giving through digital assets, the bill also eliminates the requirement for a formal appraisal when donating crypto to charities, provided the assets are publicly traded. Currently, donors are often forced to pay for expensive asset appraisals to confirm the value of their crypto gifts, even when those assets are already actively traded on exchanges. Removing this requirement lowers the barrier for making charitable donations in crypto, encouraging more philanthropic use of digital currencies.

Lummis estimates the bill could raise approximately $600 million in tax revenue over the next decade, primarily by encouraging better compliance through clearer rules. However, the bill’s true value lies not in its revenue potential but in its ability to stimulate innovation and ensure that the U.S. remains a competitive hub for blockchain technology and financial innovation. By simplifying and clarifying the tax code, the bill offers both individuals and businesses a stronger sense of security when interacting with digital assets.

Although Lummis initially sought to include this proposal in former President Trump’s broader legislative package, she remains confident that the bill can pass on its own merits. With bipartisan interest growing in regulating crypto fairly and efficiently, this legislation could become a significant step toward a balanced regulatory framework. Public commentary is now open, and Senator Lummis has invited individuals, developers, businesses, and tax professionals to share their views on how the U.S. tax system can better support the digital future. This bill may well mark the beginning of a new era for crypto regulation—one that prioritizes innovation, fairness, and usability.