U.S. Senator Cynthia Lummis is pushing for cryptocurrency tax reforms to address regulatory burdens affecting Bitcoin miners and decentralized finance (DeFi) participants. She argues current tax rules impose unfair double taxation on miners and create excessive taxable events for DeFi users.
The 2021 Infrastructure Act’s broad ‘broker’ definition inadvertently encompasses miners and developers, requiring them to report transaction data they typically cannot access. This increases compliance costs and creates operational challenges for blockchain infrastructure providers.
DeFi users face punitive tax complexities for routine activities like token swaps and liquidity provision, even when no actual profits are realized. These reporting requirements discourage participation in decentralized finance ecosystems despite their innovative potential.
Legislative momentum is building for reform, with proposals like the GENIUS Act and CLARITY Act gaining attention amid Bitcoin’s market resurgence. Lummis aims to align tax regulations with cryptocurrency industry practices to foster innovation while maintaining appropriate oversight frameworks.