Congress is being urged by a group of cryptocurrency businesses to extend proposed tax advantages beyond dollar-linked stablecoins to cover Bitcoin and other significant digital currencies. They claim that restricting the exemption will result in millions of Americans having to deal with complex tax regulations when making normal transactions using cryptocurrency.
In collaboration with Bitcoin Voter, Blocks, Crypto Council, Digital Chamber, MoonPay, River, and a number of other organizations, the Bitcoin Policy Institute spearheaded the initiative. Two influential politicians, House Ways and Means Committee Chairman Jason Smith and Senate Finance Committee Chairman Michael Crapo, received their request on Sunday.
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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Source: https://www.cryptopolitan.com/bitcoin-groups-congress-tax-stablecoins/
