Cynthia Lummis proposes to change crypto taxation
Cynthia Lummis proposes to change crypto taxation
Regulation

Cynthia Lummis proposes to change crypto taxation

By Vincenzo Cacioppoli - 15 Mar 2022

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A new bill from Senator Cynthia Lummis, dubbed by many as the cryptocurrency queen due to her familiarity with the industry and having personally invested around $200,000 in Bitcoin, is attempting to get crypto taxation changed in the United States.

Crypto taxation according to Senator Cynthia Lummis

This new bill comes just days after President Biden’s executive order initiating a major overhaul of the cryptocurrency regulatory framework.

Conservative Senator Lummis would like to reduce taxation on cryptocurrencies by establishing a no-tax zone for transactions under $600, arguing via Twitter that a more inclusive approach to the financial system needs to be approved.

Senator Lummis’ assistant, Tyler Lindholm, said in an interview that the ‘Responsible Financial Innovation Act‘, which is still being drafted, should provide greater clarity to the crypto sector.  

One of the main goals of the bill would be to provide more guidance on the issue of capital gains from mining, staking and spending cryptocurrencies.  

Crypto taxation concept

Indeed, it has been stated that:

“What we are really looking at is the integration of digital assets into the tax system”.

What would change from current taxation 

The issue is very sensitive following the passage of the Infrastructure Bill which would subject the cryptocurrency sector to a harsh taxation regime. According to the bill, capital gains in cryptocurrencies will also be taxed even if not yet realized.

In addition to the no tax area, the bill would clarify that capital gains do not apply to “productive” activities such as mining or staking precisely because the asset is not being sold. 

Lindholm states that:

“The current grey area is that you could accumulate a taxable event on capital gains under proof of participation as it stands right now, even if you’re just delegating”.

US politicians and cryptocurrencies

Lummis is not the only politician to have embraced blockchain technology and cryptocurrencies. Other senators, such as Patrick J. Toomey and Ted Cruz, have bought cryptocurrencies and are working to propose cryptocurrency-friendly reforms.

Some candidates are even running on pro-crypto platforms, a move that seems aimed more at collecting donations from the nascent tech field than getting votes, given that only 16% of US adults claim to have ever used it. 

Meanwhile, the mayors of the cities of Miami and New York decided in December to have their salary paid in crypto. 

Senator Lummis believes her bill could curb much of the illegality surrounding several crypto-related projects, providing regulatory clarity and allowing the ecosystem to grow in a regulatory framework similar to the one that currently controls securities and commodities.

 

Vincenzo Cacioppoli

Vincenzo was born in Genova but lived most of his life in Milan. He has a degree in political science. He is a journalist, blogger, writer, and marketing and digital advertising expert. After a long experience in traditional marketing, he started working with the web and digital advertising in 2011, creating a company called Le enfants. Passionate about the web and innovation, in 2018 he started exploring the topics related to blockchain technology and cryptocurrencies. Independent cryptocurrency trader since March 2018, he now collaborates with companies in the sector as a content marketing specialist. In his blog. mediateccando.blogspot.com, he has long been primarily focused on blockchain, which he considers to be the greatest technological innovation after the Internet. His first book about blockchain and fintech is scheduled for release in November.

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