- Big changes coming as Senator Cynthia Lummis pushes for major overhaul in U.S. crypto tax rules.
- Current rules, which treat cryptocurrencies as property, are criticized for being outdated, confusing, and difficult to comply with.
- Lummis declared that the current system is broken and needs to be fixed to reflect the modern realities of the crypto world.
- The proposed BITCOIN Act aims to overhaul tax guidelines and call for the creation of a federal Bitcoin reserve.
Senator Cynthia Lummis pushes for major overhaul in U.S. crypto tax rules—and the crypto world is paying close attention. As digital assets grow in popularity, outdated tax codes are creating confusion for investors and businesses alike. Now, with Lummis leading the charge, we could be on the brink of one of the most significant shifts in U.S. crypto regulation. Here’s what you need to know and why it matters more than ever.
The Current Crypto Tax Landscape
At present, the Internal Revenue Service (IRS) treats cryptocurrencies as property, not currency. This classification means that any profit made from buying and selling digital coins is considered a capital gain. If a holder sells crypto within a year, it’s taxed as ordinary income, with rates ranging from 10% to 37%, depending on the taxpayer’s income bracket. However, if the asset is held for more than a year, it qualifies for long-term capital gains, with reduced rates of 0%, 15%, or 20%.
These rules, critics say, are outdated, confusing, and difficult to comply with, especially given the fast-paced growth of blockchain technology and the increasing use of digital assets by both individuals and businesses. The laws were not designed with decentralized finance (DeFi), crypto staking, NFTs, or yield farming in mind—innovations that didn’t exist when the IRS first issued guidance on crypto taxation.
Lummis Says: “The System Is Broken”
On June 10, 2025, during a high-profile appearance at the Bitcoin Conference 2025, Senator Lummis did not hold back. She firmly declared that “the system is broken” and must be fixed to reflect the modern realities of the crypto world. Her comments highlighted a growing bipartisan consensus in Washington that existing laws are inadequate and potentially damaging to innovation in the U.S. tech sector. “Digital assets deserve a fair and modern tax structure,” Lummis stated. “Treating them like traditional property doesn’t reflect how they’re used in today’s economy. We’re watching American innovation get buried under outdated regulations.” Her goal, she said, is to foster an environment where crypto entrepreneurs can thrive, and to prevent them from fleeing to more favorable regulatory climates abroad.
The BITCOIN Act
Lummis has been at the forefront of crafting pro-crypto legislation, and her most ambitious effort to date is the BITCOIN Act. This proposed legislation not only aims to overhaul tax guidelines but also calls for the creation of a federal Bitcoin reserve, a bold proposal inspired by a prior executive order issued during Donald Trump’s presidency. While the idea of a federal reserve of Bitcoin remains controversial, it reflects Lummis’s broader ambition: to legitimize Bitcoin at the highest levels of government and integrate it more formally into the nation’s financial infrastructure.
A Bipartisan Push
On May 12, 2025, Lummis joined forces with newly elected Senator Bernie Moreno, a crypto-savvy Republican from Ohio, to pen a letter to Treasury Secretary Scott Bessent. In it, the senators requested urgent reforms to how the Treasury defines “adjusted financial statement income,” a critical metric that affects how crypto companies are taxed under corporate rules.
Their letter emphasized that the Treasury Department already has the authority to reinterpret key definitions and make the tax code more accommodating to digital asset businesses. The pair encouraged Secretary Bessent to use his regulatory discretion to simplify tax compliance and support innovation-friendly policies.
Crypto in Congress
Senator Lummis’s efforts are part of a broader movement within Congress to update U.S. policy on digital assets. Lawmakers from both parties have begun to acknowledge the economic potential of cryptocurrencies and blockchain technology. Many now see regulatory clarity as not just a matter of fairness, but also of national competitiveness. “If we don’t lead, we fall behind,” said Moreno during a recent press briefing. “Other nations are already creating favorable environments for crypto startups. We can’t afford to push the next generation of tech pioneers offshore.” His comments echo those of numerous experts in the blockchain industry, who warn that ambiguous tax rules are stifling innovation, chilling investment, and discouraging compliance among even well-meaning actors.
Crypto Tax Reform Is a Defining Moment
Senator Cynthia Lummis’s push for crypto tax reform marks a critical juncture in the evolving relationship between government and blockchain technology. Her efforts, alongside bipartisan allies like Senator Bernie Moreno, signal that Washington is beginning to take digital assets seriously. As legislation like the BITCOIN Act gains momentum and pressure mounts on regulatory agencies like the IRS and Treasury, we may be on the cusp of a new era—one where digital assets are integrated into the American financial system in a way that is both practical and fair.
For the millions of Americans who hold crypto—and the many more who will in the future—the decisions made today will shape the digital economy of tomorrow. Whether these reforms succeed could determine whether the United States remains at the forefront of financial innovation, or falls behind in a rapidly changing world.
Read Also: Is the Altcoin Bull Run Finally Starting?
Disclaimer: CryptopianNews shares this for learning and info only. It’s not meant to be financial or investment advice. Crypto markets change a lot and move quickly. Investing in them can be risky. You should always look into things yourself. Talk to a trained financial advisor before making any choices about investing.
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