Senator Cynthia Lummis is urging the U.S. government to end the double taxation on crypto miners and stakers. Currently, crypto miners and stakers in the U.S. are taxed twice. First, when they receive block rewards, which are treated as ordinary income, and again when they sell those crypto rewards, triggering capital gains tax.
This double taxation puts an unnecessary burden on miners and stakers. At the same time, traders and investors pay tax only when they make profits. Crypto mining or staking is the core ethos of blockchain technology and if miners and stakeholders are not provided a favorable regulation they might leave the country.
In the recent post on X, Senator Lummis tweeted, “It’s time to stop this unfair tax treatment and ensure America is the world’s Bitcoin and Crypto Superpower.” Bitcoin advocate Michael Saylor added, “We must end unfair taxes on Bitcoin miners if the U.S. wants to lead.”
Lummis and Saylor argue that this system is unfair and discourages participation in securing blockchain networks. It also puts the U.S. at risk of falling behind countries like El Salvador and the UAE, where mining isn’t taxed at all. “It’s time to fix this and make America the global crypto leader,” Lummis said.
Other governments are already attempting to recruit cryptocurrency miners with beneficial tax schemes. Mining is tax-free in El Salvador, and Bitcoin is considered legal currency. The UAE offers 0% tax on cryptocurrency mining and no personal income tax, especially in free zones like Dubai and Abu Dhabi.
Even other countries are in favor of Bitcoin and crypto adoption. Portugal used to offer tax-free crypto gains, and although the rules are shifting, it remains relatively friendly. Georgia offers no crypto tax for individuals and cheap electricity. Germany offers tax exemptions on cryptocurrencies held for over a year, while Switzerland’s Zug region is renowned for its crypto-friendly regulations.
As such, nations draw more cryptocurrency companies, America might get left behind. Senator Lummis and Michael Saylor are calling for tax reform to stimulate innovation and maintain America’s leadership of the crypto revolution.