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U.S. Senator Cynthia Lummis is pushing to eliminate taxes on small Bitcoin transactions, a move aimed at reshaping how the Internal Revenue Service (IRS) treats everyday crypto spending.
Currently, the IRS classifies cryptocurrency as property, meaning each transaction, no matter how small, could trigger a capital gains report. This has long been viewed as a barrier to using Bitcoin for daily purchases.
Lummis’s proposal aims to simplify this process and promote broader cryptocurrency adoption. As she finalizes her plans, analysts advise investors to monitor new legislative developments, particularly regarding the de minimis exemption threshold, inflation adjustments, and the timeline for when these changes may take effect. These factors will ultimately determine how many routine Bitcoin payments can bypass capital gains reporting.
Senator Lummis’ new Bitcoin-related initiative raises controversy
Individuals in the crypto space have received Senator Lummis’ Bitcoin initiative to remove taxes on small Bitcoin transactions with mixed reactions, as analysts highlight that this change could significantly affect how regular users engage with Bitcoin.
Some have acknowledged these efforts as wonderful news for regular Bitcoin users, comparing how small purchases will be handled to buying a coffee with sats. They further highlighted that Senator Lummis is a strong supporter of Bitcoin, citing her efforts for the Strategic Bitcoin Reserve. According to them, her recent plan for Bitcoin will make the cryptocurrency a real currency, rather than just a speculative investment.
On the other hand, some have raised concerns about Lummis’ plan, arguing that an approach focused solely on Bitcoin is unhealthy for the US crypto market. Based on their argument, this leaves out many individuals in the industry who utilize other forms of cryptocurrency, such as Litecoin, DASH and Dogecoin, to make payments. According to them, these individuals should also have the opportunity to get tax breaks on their daily transactions.
“How about no capital gains in countries outside the US, such as Dubai or Singapore?” Some asked. Notably, Lummis has introduced several Bitcoin-related regulations, including the BITCOIN Act. This act seeks to establish a Strategic Bitcoin Reserve, positioning the US as a global leader in crypto.
Regarding the senator’s recent plans for Bitcoin, a reliable source has highlighted that this initiative might entice more individuals to use Bitcoin by reducing financial strain for small transactions, making it more appealing for retail traders and investors. These efforts might also impact the price of Bitcoin in the near future.
Crypto analysts have also commented on the discussion, noting that eliminating taxes on small Bitcoin transactions could increase trading volume and liquidity for BTC pairs. According to their research, tax costs kept many small investors away from spot markets on platforms like Binance or Coinbase in the past. With this new initiative, eliminating these taxes may encourage more frequent trading.
Still, there are risks associated with this initiative, including possible opposition from regulators, among others.
Lummis asserts that funding for a US Strategic Bitcoin Reserve will commence anytime
Apart from working on eliminating taxes on small Bitcoin transactions, Lummis made a significant announcement that funding for a US Strategic Bitcoin Reserve will commence at any moment.
Her remarks triggered a heated debate in Washington over how swiftly the Treasury might launch the plan. Interestingly, this discussion was raised even before Congress finalized legislation.
Although several draft bills are still winding their way through Congress, Lummis’s statement suggests that the Treasury Department might have the power, or at least gain support from politicians, to start preparing infrastructure or funding before formal legislation is enacted.
In an X post, the US Senator acknowledged that creating laws is tough, and they are still pushing towards passage. However, with the help of President Trump, Lummis asserted that the acquisition of funds for aN SBR can begin at any time.
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