- Wyoming Senator Cynthia Lummis revealed that she is working on a bill that would introduce a de minimis tax exemption for small Bitcoin transactions, following the suggestion of Jack Dorsey.
Senator Cynthia Lummis from the Republican Party recently gave the public a sneak peek at her next big move on Bitcoin (BTC). The Wyoming politician revealed on Thursday that she is working on a de minimis tax exemption on the premier crypto asset.
Additionally, Lummis encouraged Bitcoin advocates in the US to tell their senators and House representatives to support the pending measure. Her statement came in response to X (formerly Twitter) co-founder and former CEO Jack Dorsey, who said that everyday Bitcoin transactions should be subject to a de minimis tax exemption.
De Minimis Tax Exemption: How It Works
“De minimis” is a legal doctrine derived from the Latin phrase “De minimis non curat lex.” It translates to “The law does not concern itself with trifles.” In other words, it disregards something due to triviality.
Lummis has yet to unveil her full draft on the proposed de minimis exemption on Bitcoin, but she earlier suggested a $300 de minimis exemption for digital asset gains and losses. Moreover, it likely aims to overhaul the treatment of the Internal Revenue Service to BTC as property rather than currency.
The current taxonomy poses a tax burden to Bitcoin users. The present regulatory regime means BTC price appreciation could easily create a taxable event from capital gains. It could also trigger when using the digital asset to pay for goods and services, especially when its price moved between the time it was acquired and spent.
To comply with this rule, every Bitcoin user must keep a record of the cost basis and the fair market value for every transaction, no matter how small. Furthermore, the complexity created by the regulation would discourage innovations centered on making BTC a viable medium of exchange for retail transactions.
Lummis’ proposal potentially offers a safe harbor for small transactions involving BTC. It would eliminate the tax friction for minor personal purchases but can still trigger taxable events for transactions exceeding a specific threshold.
Bitcoin advocates expressed their approval of Lummis’ stance. On the other hand, some criticized her BTC-centric proposals in the legislature.
The Litecoin team particularly called Lummis out for supposedly overlooking other altcoins designed for payments like Litecoin (LTC), DASH, and Dogecoin (DOGE) in her proposal. The group urged her to pass the same tax exemptions on similar assets, while others pointed out that people rarely use Bitcoin for payments due to its wide, short-term price fluctuations, plus slow and expensive transactions.
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