Senator Lummis Says Bitcoin Is Unfairly Targeted By Flawed Tax Rules

U.S. Senator Cynthia Lummis is pushing for revisions to existing crypto tax regulations, citing the unfair treatment of Bitcoin and other digital assets. Bitcoin miners are among the hardest hit, with current rules potentially leading to double taxation and steep compliance requirements.

Flawed Tax Rules Are Hurting Bitcoin, Says Senator Cynthia Lummis

In a post on X, Senator Lummis criticized America’s cryptocurrency tax framework for unfairly targeting Bitcoin and other cryptocurrencies. The long-time crypto advocate stated that the current tax rules are fundamentally flawed, and Bitcoin is bearing the brunt.

While not explicitly named, her comments appear to be directed at the IRS’s crypto tax reporting rules, particularly those introduced in the 2021 Infrastructure Investment and Jobs Act. This legislation broadly defined “brokers,” grouping miners and developers under the same category.

This sweeping classification has drawn criticism from miners and developers, who argue that compliance with these rules is practically impossible. The regulations require them to report details such as names and transaction amounts in their tax filings—information they often do not have access to.

“Bitcoin and digital assets are being unfairly targeted because of flawed tax rules,” said Senator Cynthia Lummis. “We need crypto revisions in reconciliation.”

There is also concern that the flawed tax code could result in double taxation for miners and participants in decentralized finance (DeFi). Miners face taxation on block rewards and again on capital gains upon selling their holdings. Meanwhile, DeFi users risk triggering multiple taxable events even when no actual capital gains are realized.

Despite the regulatory uncertainty, Bitcoin has surged to a new all-time high of $111,970. Cryptocurrency markets are rallying, fueled by a strong performance from Bitcoin and Ethereum after a weekend of mostly sideways trading.

Investors Have Their Eyes On Rule Changes

Lummis’s post urged Congress to pursue a rule change using a special amendment vehicle. The pro-Bitcoin senator advocates for “crypto revisions in reconciliation” to speed up the amendment process.

Under House rules, certain tax or spending bills can be passed by a simple majority through reconciliation. Senator Lummis hopes to leverage this process to narrow the definition of “broker” and bypass bipartisan gridlock.

Moreover, U.S. lawmakers are currently debating a wave of new crypto regulations that could significantly reshape the industry. Congress is approaching another cloture vote on the GENIUS Act this week, while the CLARITY Act also advances.

In addition, a bill to convert President Donald Trump’s executive order for a Strategic Bitcoin Reserve into law has made its debut. The momentum behind these legislative efforts has fueled optimism that Senator Lummis’s proposed crypto tax reforms could soon become law.