Tax Policy, Not Technology, Is Blocking Bitcoin Payments, Advocates Warn Congress

WASHINGTON — A Washington advocacy group issued a stark warning to Congress on Monday, stating that outdated U.S. tax law is actively suppressing Bitcoin's use for everyday payments and that lawmakers have only a few months to enact a critical fix. The core issue: every minor transaction, from buying groceries to paying a bill, is treated as a taxable capital event under current IRS rules, creating an impossible compliance burden for consumers and keeping the digital asset trapped as a speculative investment rather than a functional currency.

A Shrinking Window For Action

The Bitcoin Policy Institute (BPI) has been working the halls of Capitol Hill, meeting with 19 offices across the House and Senate over the past three months.

The group is pushing for a de minimis tax exemption — a rule that would allow small Bitcoin transactions under a set dollar amount to bypass capital gains reporting entirely.

Based on BPI’s own timeline, the window to pass such a measure runs from now through August 2026. After that, midterm election pressures are expected to crowd out any serious movement on complex tax legislation.

Senator Cynthia Lummis of Wyoming has been the loudest voice in Congress on this issue. She introduced a standalone bill in July 2025 that would exempt crypto transactions of $300 or less, with a $5,000 annual cap.

The bill stalled. And with Lummis set to leave the Senate in January 2027, the BPI warns that her departure could remove the issue’s most committed champion from the legislative arena for years.

Two Bills, One Goal — But No Clear Path

The legislative picture is complicated by competing proposals. While the Lummis bill targeted Bitcoin and broader crypto transactions, a separate House bill introduced by Representatives Max Miller and Steven Horsford focused exclusively on dollar-pegged stablecoins.

The existence of two bills with different scopes has muddied the path forward, even as BPI reports that bipartisan support for some form of exemption remains intact.

Pierre Rochard, a board member at Bitcoin treasury firm Strive, put the stakes plainly:

That line cuts to the heart of what advocates are fighting. The current tax treatment effectively punishes anyone who tries to spend Bitcoin rather than hold it.

Every purchase requires tracking the asset’s value at the time of acquisition and again at the point of sale — a level of record-keeping that makes routine transactions impractical for most people.

A de minimis exemption already exists in US law for foreign currency transactions, giving supporters a legal precedent to point to. Whether Congress acts on it before the political calendar closes the door remains an open question — one that, according to the BPI, may not come around again for a long time.

Featured image from Unsplash, chart from TradingView