It’s no secret that the current American taxation framework regarding cryptocurrencies is outdated and counterproductive, but what’s truly disturbing is how it actively undermines technological progress and economic growth. Senator Cynthia Lummis’s recent attempt to amend the “One Big Beautiful Bill” (OBBB) exposes one of the most egregious faults: miners and stakers face double taxation. They pay income tax when they receive block rewards or staking earnings, and then capital gains tax again upon liquidation. This punitive structure isn’t just unfair—it stifles economic incentives and drives innovation overseas, away from US jurisdiction. For a nation that prides itself on ingenuity, this approach is remarkably backward.
Small Transactions, Big Headaches
Another hidden burden for ordinary Americans dabbling in cryptocurrencies is the requirement to calculate capital gains—even on tiny purchases. This technicality turns everyday transactions, such as buying a coffee with Bitcoin, into a cumbersome, legalistic ordeal. The Bitcoin Policy Institute’s push for a “de minimis” exemption is a pragmatic fix, cutting through red tape that currently dissuades everyday adoption. This is about more than convenience; it’s about creating a tax environment that treats digital assets as functional currency rather than speculative instruments. Without such reforms, crypto will remain a niche tool for investors, not a viable medium of exchange.
Congress’s Slowness Risks Losing the Crypto Race
The bipartisan appetite exemplified by Lummis’s amendment is commendable, yet the Senate’s lethargy and opacity on the bill’s specifics reflect a deeper malaise in Congress’s readiness to embrace emerging industries. The delay in releasing draft text and indicating whether the issues will be addressed separately or together highlights a bureaucratic unwillingness to streamline reforms. This indecisiveness risks ceding America’s competitive advantage in blockchain innovation to more agile nations. With countries like El Salvador and Turkey making bold moves to integrate crypto, the United States’ half-measures are dangerously anachronistic.
Aligning Crypto Taxation with Traditional Property Norms
Dennis Porter’s analogy comparing mining rewards to farm produce is spot-on yet overlooked in tax circles. Treating staking rewards and mining earnings as “self-generated property” and taxing them solely upon sale aligns tax policy with common-sense property principles. This would alleviate the double taxation issue and simplify compliance by recognizing the inherent nature of these digital assets. If American tax law embraced this perspective, it would not only foster fairness but also inject fresh vitality into the domestic crypto ecosystem—encouraging miners and validators to maintain operations on US soil rather than fleeing to friendlier tax regimes abroad.
A Call for Courageous Reform
What this debate reveals is a larger truth: America’s crypto tax policy suffers from a lack of visionary leadership willing to challenge entrenched regulatory inertia. Senator Lummis’s proposed amendment is an essential first step, but it requires broad support and political courage to be fully realized. The demand from diverse stakeholders—from Bitcoin advocates to proof-of-stake proponents and crypto trade groups—signals the nascent coherence of a powerful coalition. The government must move beyond routine legislative caution and seize this narrow window of opportunity to position the United States not just as a participant but as the undisputed leader in digital asset innovation. Anything less is a squandered chance that will reverberate through our economic future.
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