Pro-Bitcoin Senator Trashes Biden's 'Bullish On Crypto' Budget: 30% Tax Would 'Destroy Any Foothold The Industry Has'

Sen. Cynthia Lummis (R-Wyo.) on Tuesday voiced concerns over a tax proposal that appears in the White House’s 2025 budget draft. 

What Happened: She said that the government is apparently optimistic toward cryptocurrencies, but warned of the dangers of a hefty tax. 

“The White House 2025 budget is incredibly bullish on crypto assets, some might even say they believe it’s going to the moon. But a proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America,” Lummis said in a post on X.

The White House 2025 budget is incredibly bullish on crypto assets, some might even say they believe it's going to the moon.🚀

But a proposed 30% punitive tax on digital asset mining would destroy any foothold the industry has in America.

— Senator Cynthia Lummis (@SenLummis) March 11, 2024

President Joe Biden’s proposed budget for the next fiscal year, which was announced Monday, sets forth new rules that could impact the cryptocurrency industry. 

Within the “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” a document released by the U.S. Treasury Department, the administration acknowledged the inadequacy of current laws in relation to digital assets. Its solution is to implement an excise tax, which is typically imposed on physical goods.

The tax would be set at 30% of the electricity costs incurred by companies mining digital assets. 

Under the proposed regulation, mining companies would be required to report their electricity usage details. For those companies that buy electricity externally, the value of this purchased power would need to be disclosed. Similarly, mining operators leasing computing power must report the cost of electricity as determined by their lessor, which will act as the basis for the new tax.

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Why It Matters: At the core of the budget are measures aimed at cryptocurrencies, such as enforcing wash sale rules, which are designed to prevent investors from claiming tax benefits on securities sold at a loss and then quickly repurchased.  “The Budget saves billions of dollars by closing other tax loopholes that overwhelmingly benefit the rich and the largest, most profitable corporations," read the proposal.

Addressing the intricacies of wash trading within the cryptocurrency domain, a fact sheet released alongside the budget explains, “A crypto investor – unlike an investor in stocks or bonds – can sell a cryptocurrency at a loss, take a substantial tax loss to reduce their tax burden, and then buy back that same cryptocurrency the very next day.” 

Price Action: At the time of writing,  Bitcoin BTC/USD was trading at $72,075 up 0.46% over the last 24 hours, according to Benzinga Pro data.

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