Introduction
Block founder Jack Dorsey has reignited the push for a de minimis tax exemption on small Bitcoin transactions, prompting Senator Cynthia Lummis to confirm she’s working on reviving the failed legislative effort. The proposal would exempt everyday crypto purchases under a few hundred dollars from capital gains reporting requirements, addressing current IRS treatment that creates significant burdens for merchants and consumers. This comes after similar amendments failed to make it into Trump’s reconciliation bill in July due to timing constraints, setting the stage for renewed legislative action.
Key Points
- The proposed de minimis exemption would exempt Bitcoin transactions under a few hundred dollars from capital gains reporting requirements
- Current IRS treatment of crypto as property means even small purchases create significant tax reporting burdens for merchants and consumers
- Industry experts caution the exemption alone won't solve Bitcoin's payment challenges without additional reforms like broker-reporting rules and fiat-conversion tools
The Legislative Push for Crypto Tax Relief
The renewed effort for Bitcoin tax reform began when Block founder Jack Dorsey publicly tweeted “We need a de minimis tax exemption for everyday bitcoin transactions,” coinciding with his payments company’s announcement of a new Bitcoin payments and crypto-integrated wallet targeting small businesses using Square point-of-sales systems. Senator Cynthia Lummis (R-WY) immediately responded with “Working on it. If this is of interest to you, please tell your Senators/House member!” This exchange highlights unfinished business from July, when Lummis attempted to attach crypto-friendly amendments to Trump’s “One Big, Beautiful Bill” but failed to get them to the Senate floor before Vice President J.D. Vance cast the tie-breaking vote passing the legislation.
The proposed amendments would have included exactly what Dorsey is now demanding: a de minimis exemption allowing Americans to avoid reporting crypto transactions under a few hundred dollars for capital gains purposes. Currently, the IRS treats cryptocurrency as property, meaning even small purchases like buying coffee or groceries with Bitcoin trigger taxable events that create significant reporting burdens for merchants and consumers alike. In the hectic final hours of negotiations over the reconciliation bill, pro-crypto senators and industry policy leaders raced to include the de minimis exemption alongside other benefits for crypto stakers, miners, and businesses holding digital assets.
Industry Perspective on Practical Implementation
Arthur Azizov, Founder and Investor at B2 Ventures, provided crucial industry insight, telling Decrypt that a de minimis exemption “is a pragmatic fix for a paperwork problem” that could help merchants and wallets experiment with Bitcoin. However, Azizov cautioned that the exemption alone won’t turn Bitcoin into a reliable payment method, noting that stores can still lose money if Bitcoin’s price changes between payment and conversion to dollars. This volatility concern remains a fundamental challenge for Bitcoin’s adoption as a mainstream payment method, regardless of tax treatment improvements.
Azizov emphasized that the reform needs to be “part of a package that includes clear broker-reporting rules, anti-fragmentation protection, and fiat-conversion tools” to become “a realistic step toward broader merchant adoption.” This comprehensive approach suggests that while the de minimis exemption addresses immediate administrative burdens, broader structural reforms are necessary for meaningful cryptocurrency integration into everyday commerce. The Treasury Department would play a crucial role in implementing any such package, requiring coordination between legislative action and regulatory implementation.
Broader Crypto Tax Reform Efforts
Senator Lummis has remained active on crypto tax reform across multiple fronts beyond the de minimis exemption. In May, she and Senator Bernie Moreno (R-OH) sent a joint letter to Treasury Secretary Scott Bessent demanding immediate action on a separate but related Biden-era tax policy that puts U.S. crypto firms at risk of paying millions in taxes on profits they haven’t realized. The senators wrote that “Neither Congress nor FASB planned this outcome,” describing it as “the unintended result of basing tax liability on decisions by a private organization… not principles of taxation.”
This multi-pronged approach to cryptocurrency taxation reflects growing recognition that current IRS treatment creates multiple points of friction for both consumers and businesses. Lummis had vowed to reintroduce the de minimis proposal in upcoming Senate sessions, calling it a key step toward Bitcoin adoption. The coordination between industry leaders like Dorsey and legislative champions like Lummis suggests a strategic push to address cryptocurrency taxation comprehensively, rather than through piecemeal reforms that might create new complications while solving existing ones.
📎 Related coverage from: decrypt.co