The cryptocurrency market faced a significant legislative setback this week as a major U.S. budget bill advanced through the Senate without a highly anticipated pro-crypto tax amendment. Despite fervent last-minute lobbying by the digital assets industry, a proposal by Senator Cynthia Lummis aimed at easing the tax burden on crypto users was not included in the final version of the bill that passed on Tuesday. The amendment sought to introduce several key changes, including waiving capital gains taxes on crypto transactions under $300 and altering how rewards from staking and mining are taxed. The failure of this provision to make it into the broader legislative package represents a temporary halt to efforts for clearer and more favorable U.S. crypto tax regulations, leaving investors and developers in a state of continued uncertainty. The market's reaction, however, has been relatively subdued, suggesting traders are either pricing in the low probability of its passage or are more focused on other market drivers.

Crypto Tax Hopes Dashed as Market Shows Muted Response

The core of Senator Lummis's proposal was to address what many in the industry see as unfair double taxation and a barrier to mainstream adoption. The plan would have taxed rewards from staking, mining, airdrops, and forks only at the point of sale, rather than upon acquisition and again at sale. This change, championed by groups like the Digital Chamber, would have aligned the tax treatment of created crypto assets with that of other commodities, potentially unleashing more network participation and investment in proof-of-stake networks like Ethereum (ETH). For instance, an ETH staker currently faces a tax liability on the value of the rewards when they are received and is then taxed again on any capital gains when those rewards are eventually sold. The proposed amendment would have deferred the initial tax event, simplifying accounting and reducing the immediate tax burden. The exclusion of this measure from the Senate bill, which passed on a narrow 50-50 vote broken by the Vice President, means these structural tax issues will persist, forcing traders and stakers to continue navigating the complex existing framework.

Analyzing the Impact on ETH, SOL, and ADA Trading

Despite the negative legislative news, the price action across major altcoins has not indicated panic selling. Instead, the market reflects a broader consolidation pattern. Over the past 24 hours, Ethereum (ETH) has seen a modest decline. The ETH/USDT pair dropped 0.69% to trade around $2,520.69, after fluctuating between a high of $2,542.44 and a low of $2,476.41. This suggests that while there was some bearish pressure, buyers stepped in above the key $2,475 support level. Similarly, Solana (SOL), another major staking asset, saw its SOL/USDT pair decrease by 1.11% to $148.48, with a 24-hour range between $145.28 and $150.37. The immediate support for SOL appears to be holding around the $145 mark. Cardano (ADA) also experienced a slight dip, with the ADA/USDT pair falling 0.62% to $0.5743. Interestingly, the ADA/BTC pair showed strength, rising 1.32%, indicating some relative outperformance against Bitcoin. The overall muted response suggests that while regulatory clarity is a long-term bullish catalyst, its absence in this specific bill was not a significant enough event to derail the market's current trajectory, which appears more influenced by macroeconomic factors and institutional flows.

The legislative journey for this budget bill is far from over. It must now return to the House of Representatives for another vote, where it is expected to face significant debate. The bill's potential to add over $3 trillion to the U.S. budget deficit remains a major point of contention. For the crypto market, this means the cloud of regulatory uncertainty will linger. The failure to pass Lummis's amendment underscores the deep political divisions surrounding digital assets. While proponents like Treasury Secretary Scott Bessent advocate for policies that make the U.S. a hub for innovation, influential critics like Senator Elizabeth Warren remain skeptical, viewing pro-crypto measures as favors to large corporations. This ongoing political tug-of-war creates a challenging environment for traders to navigate. Without clear rules of the road, institutional capital may remain hesitant to fully commit, and retail investors are left grappling with a tax system not designed for the nuances of digital assets. Traders must therefore continue to factor in regulatory risk as a key variable in their long-term investment theses for assets like BTC and ETH.