Bitcoin Advocates Demand Congress Expand Crypto Tax Relief Scope
Bitcoin's biggest backers are turning up the heat on Capitol Hill. They're not just asking—they're demanding lawmakers widen the tax relief net for digital assets. Forget minor adjustments; this push aims to reshape how the entire crypto ecosystem gets treated by the IRS.
The Core Argument
Advocates argue the current framework is a relic. It treats every micro-transaction—buying coffee, tipping content creators, using decentralized apps—as a taxable event. That creates a compliance nightmare and stifles real-world use. Their fix? A de minimis exemption. Think of it like forgetting the pennies in your couch; small, everyday crypto spends shouldn't trigger a capital gains calculation.
Why Congress Can't Look Away
This isn't a niche tech issue anymore. With millions of voters now holding digital assets, political pressure is mounting. Lawmakers are caught between a rock (treasury revenue concerns) and a hard place (a growing, vocal constituency). The lobbying blitz frames this as critical for U.S. competitiveness—because nothing motivates D.C. like the fear of falling behind.
The Finance World's Cynical Take
Let's be real—Wall Street veterans are watching with a smirk. They've seen this movie before: a hot new asset class begs for favorable rules, promising innovation while quietly building a tax-advantaged moat. Some old-guard bankers probably wish they'd lobbied this hard to keep their own carried interest loopholes.
The Bottom Line
The call is clear: adapt the tax code or risk choking innovation. If Congress listens, it could signal a major policy shift, treating crypto not as a speculative toy but as usable digital money. If they ignore it? Well, good luck explaining that to the crypto-holding voters back home. The ball is in their court—and the advocates aren't letting up.
Every crypto purchase triggers a taxable event
The groups argue that current plans WOULD only help people using payment stablecoins that follow rules set by the GENIUS Act, which became law in July. They say this narrow approach defeats the point of making crypto taxes easier.
Right now, the IRS considers cryptocurrency to be property. That means anyone buying something small, like a cup of coffee, with Bitcoin has to report it as a taxable event. They must track their original purchase price and figure out if they made or lost money on the transaction.
“Imagine having to pay capital gains every time you swipe a card? It’s definitely discouraging crypto payments, and if the U.S. wants to be the crypto capital of the world, allowing crypto to be used as money without any restrictions and compliance burdens is critical,” said Zakhil Suresh, who runs BitSave, a crypto asset management company.
The coalition wants payment stablecoins that meet GENIUS Act standards to get the same treatment as physical cash, with no limits on individual transactions or yearly spending.
They explained that payment stablecoins depend on blockchain networks that use separate tokens to function. These network tokens handle things like security and processing transactions. The groups say both types of digital assets need tax relief for any policy to actually work.
Their proposal includes specific guidelines. Network tokens would need a market value of at least $25 billion to qualify. Individual transactions would be capped at $600, with a yearly limit of $20,000.
Millions of Americans already use crypto for payments
According to Federal Reserve information, around 45 million Americans hold cryptocurrency, mostly Bitcoin. The letter pointed out that roughly 7 million Americans made payments using Bitcoin or similar network tokens last year. More than 3,500 stores now take Bitcoin payments in all 50 states, making America the biggest market for Bitcoin transactions.
This push follows an earlier attempt that didn’t succeed. Senator Cynthia Lummis from Wyoming tried to add crypto tax changes to President Donald Trump’s reconciliation bill in July, but couldn’t get it through.
Jack Dorsey, who started Block, brought the issue back up last October. He called for federal tax breaks on everyday Bitcoin purchases when his payment company launched crypto wallets for small businesses. Lummis promised then to bring the proposal back in future Senate meetings, calling it important for wider Bitcoin use.
The groups say the matter has become more pressing because new broker reporting rules took effect on January 1, 2025. These rules require reporting of digital asset sales on FORM 1099-DA.
“Without calibrated de minimis relief, the result will be widespread discrepancies, unnecessary audit risk, and reporting complexity vastly disproportionate to the economic substance of the transactions involved,” the letter says.
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