Bitcoin Groups Push Congress for Crypto Tax Exemptions

The letter, sent by the Bitcoin Policy Institute and joined by groups including Bitcoin Voter, Blocks, the Crypto Council for Innovation, the Digital Chamber of Commerce, MoonPay, and River, targets the chairmen of the Senate Finance and House Ways and Means Committees. Its core argument is that current legislative proposals are too narrow. While the recently signed GENIUS Act provides a framework for payment stablecoins, the coalition contends that granting tax exemptions only to these dollar-pegged tokens ignores the operational reality of blockchain networks. “Payment stablecoins do not operate in a vacuum; they run on open blockchain networks that rely on separate network tokens for consensus, security, and transaction execution,” the letter states, making the case that both asset types must receive relief for the policy to function.

To address this, the coalition proposes a two-tiered approach. First, it recommends “cash-like treatment” for GENIUS-compliant payment stablecoins with no transaction or annual limits. Second, and more significantly, it argues for extending de minimis exemptions to major network tokens like Bitcoin. The proposal sets a $25 billion market capitalization threshold to determine which network tokens qualify, alongside specific usage limits: a $600 cap per transaction and a $20,000 annual ceiling. This structure is designed to exempt small, everyday purchases from complex capital gains calculations while preventing abuse for larger transactions.

The push for reform is grounded in what the groups describe as rapidly growing real-world adoption. Citing Federal Reserve data, the letter notes that roughly 7 million Americans used Bitcoin or other network tokens for payments in 2024. Furthermore, it claims over 3,500 merchants across all 50 U.S. states now accept Bitcoin at the point of sale, positioning the country as the world’s largest jurisdiction for such payments. For these users and businesses, the current tax code presents a significant barrier. Because the IRS classifies cryptocurrency as property, every transaction—even buying a coffee—triggers a taxable event requiring the tracking of cost basis and calculation of capital gains or losses.

This compliance burden, warns Zakhil Suresh, founder and CEO of crypto asset manager BitSave, is actively discouraging crypto payments. “Imagine having to pay capital gains every time you swipe a card?” Suresh told Decrypt. “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.” The urgency for legislative action is heightened by impending IRS regulations. The coalition highlights that new broker reporting rules, requiring digital asset sales to be reported on Form 1099-DA, will apply to transactions occurring on or after January 1, 2025. Without what the letter calls “calibrated de minimis relief,” this will result in “widespread discrepancies, unnecessary audit risk, and reporting complexity vastly disproportionate to the economic substance of the transactions involved.”

This latest advocacy effort revives a legislative push that stalled earlier this year. In July, Senator Cynthia Lummis (R-WY) failed to attach crypto tax amendments to a major reconciliation bill. The debate was rekindled last October when Block founder Jack Dorsey called for federal tax exemptions on everyday Bitcoin transactions as his company launched crypto-integrated wallets for small businesses. At that time, Senator Lummis vowed to reintroduce the proposal, calling it a key step toward Bitcoin adoption.

The coalition’s letter now places the issue squarely before the congressional tax-writing committees as they grapple with how to simplify reporting for the estimated 45 million Americans who own cryptocurrency. By framing the exemption as essential for the policy goals of the GENIUS Act and a necessary response to widespread adoption, the Bitcoin Policy Institute and its allies are making a direct appeal for the U.S. to establish a tax framework that treats cryptocurrency as a viable medium for everyday exchange, not just a speculative investment asset.