Senator Cynthia Lummis is advocating for the elimination of double taxation on crypto miners and stakers in the U.S., arguing that the current system is unfair and threatens the country's competitiveness in the cryptocurrency sector.
Double Taxation on Crypto Participants
The current tax system burdens crypto miners and stakers in the U.S. with double taxation: first when they receive block rewards, which are treated as ordinary income, and again when they sell those rewards, triggering capital gains tax. Senator Lummis states that this policy is unfair compared to traders who are taxed only on profits.
International Tax Incentives
Countries such as El Salvador and the UAE are already providing more favorable tax conditions for crypto miners. In El Salvador, mining is tax-free, and Bitcoin is considered legal tender. The UAE implements a 0% tax rate on cryptocurrency mining and no personal income tax, especially in free zones like Dubai and Abu Dhabi.
Crisis for the U.S. Crypto Market
If the U.S. doesn't offer more favorable tax conditions, such as eliminating double taxation, it risks losing crypto companies to other nations. Senator Lummis emphasizes the need to ensure the competitiveness of the American crypto market to maintain the country's leadership in this field.
Calls from Senator Lummis and other supporters highlight the need for tax reform to stimulate innovation and uphold the U.S. as a global leader in cryptocurrency.
