Senate Seeks to Eliminate Double Taxation on Cryptocurrency through Lummis’ Reform Initiative

The U.S. Senate Finance Committee, led by Senator Mike Crapo (R-Idaho), has arranged a significant hearing for October 1, 2025, at 10:00 AM ET in the Dirksen Senate Office Building. The hearing, titled “Examining the Taxation of Digital Assets,” will include testimony from prominent industry figures such as Lawrence Zlatkin (Coinbase Global’s Vice President of Tax), Jason Somensatto (Policy Director at Coin Center), Andrea Kramer (ASKramer Law), and Annette Nellen (Chair of the AICPA Digital Assets Tax Task Force). The purpose of the session is to discuss shortcomings in the current tax treatment of cryptocurrencies and consider legislative updates to better reflect the rapidly changing digital asset sector.

This hearing comes after the Trump administration’s policy report from July 2025, which advocated for digital assets to be recognized as a separate asset class with specific tax guidelines. This recommendation is part of a larger initiative to clarify regulations, especially following the enactment of a law in July 2025. Signed by President Donald Trump, the legislation gives oversight responsibilities to the CFTC and SEC and introduces a $600 exemption for minor crypto transactions, aiming to make compliance easier for everyday users.

One of the main topics will be Senator Cynthia Lummis’s (R-WY) proposed bill to overhaul crypto taxation. Her legislation aims to prevent double taxation on mining and staking rewards by postponing income recognition until the assets are sold, and it also proposes a $300 exemption for small transactions. Supporters believe these changes would encourage innovation and lessen compliance challenges for both users and organizations.

The hearing also highlights the IRS’s ongoing focus on digital assets. Currently, cryptocurrencies are classified as property, making transactions subject to capital gains tax. However, the IRS has been criticized for its outdated guidance, especially regarding staking rewards and airdrops. The Senate’s discussions could determine whether Congress will require clearer tax reporting rules or delegate more authority to the Treasury and IRS.

Industry observers see the hearing as a possible turning point for regulatory certainty. Past events, like the 2021 Infrastructure Bill debates, led to greater institutional involvement in crypto after tax rules were revised. Recent developments, such as a proposed Ethereum ETF and Avalanche’s treasury growth, demonstrate increasing institutional interest, which could be further encouraged by more straightforward tax regulations.

However, the timing of the hearing depends on congressional funding. With a potential government shutdown deadline on September 30, there could be delays, but the announcement of the hearing indicates bipartisan support. Lawmakers’ ability to promote innovation while protecting investors will play a crucial role in shaping the future of the U.S. crypto market.