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For tax professionals and cryptocurrency investors alike, Senator Cynthia Lummis’s new crypto tax bill represents a major step toward clarity and practical compliance in an often confusing digital asset landscape.
The bill’s de minimis exemption allows taxpayers to avoid capital gains tax on personal crypto transactions under $300, capped at $5,000 annually. This aligns crypto with other everyday cash substitutes, reducing the administrative burden for individuals using crypto for personal purchases.
Staking and mining rewards would be taxed only when sold or disposed of, rather than at the moment they are earned. This approach prevents liquidity problems and “phantom” tax liabilities, which often occur due to the volatility of crypto assets.
Furthermore, the extension of wash sale rules to crypto provides consistency with traditional securities taxation while protecting investors from potential misuse of short-term losses. The bill also clarifies that cryptocurrency lending and charitable crypto donations will not trigger unnecessary tax obligations.
Overall, this proposal provides much-needed clarity for taxpayers and advisors navigating the rapidly evolving crypto landscape. While broader legislation is necessary for full regulatory certainty, the bill is a meaningful step to reduce complexity, protect investors, and ensure fair taxation.
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