Lummis Crypto Tax Reform Bill Could Transform U.S. Digital Asset Rules
Main Idea
Senator Cynthia Lummis introduced a digital asset tax reform bill aimed at modernizing U.S. tax rules for cryptocurrencies, addressing issues like tax treatment of lending, wash sale rules, and mark-to-market accounting.
Key Points
1. The bill introduces a formal definition for 'secured distributed ledger' and includes carve-outs for digital asset lending under Section 1058.
2. It extends the 30-day wash sale rule to digital assets, aligning their treatment with securities.
3. A new Section 475(g) allows mark-to-market accounting for traders and dealers, benefiting high-frequency trading firms and crypto-native platforms.
4. The bill includes provisions for mining, staking, and charitable contributions, reflecting Web3 operational realities.
5. Regulatory safeguards are included to address mixed-transaction treatment, basis adjustments, and broker reporting.
6. The reforms have a sunset clause set for December 31, 2035, allowing for future adjustments based on evolving industry experience.
Description
Senator Lummis proposes crypto tax overhaul to align digital assets with securities rules on lending, staking, wash sales, and mining.
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