Advocacy groups for Bitcoin have reached out to U.S. lawmakers, pushing for a broader extension of tax exemptions that currently favor stablecoins. In a recent letter addressed to key members of Congress, these groups emphasized the need for the de minimis tax exemption to encompass Bitcoin and significant network tokens, rather than limiting it to stablecoins alone.
The coalition, which includes organizations such as the Bitcoin Policy Institute, Bitcoin Voter, and others, proposed a cash-like treatment for stablecoins compliant with the GENIUS Act. They also suggested that a market capitalization threshold of $25 billion be established to identify qualifying network tokens.
Highlighting the increasing real-world use of Bitcoin, the letter noted that thousands of merchants across all 50 states now accept Bitcoin payments. The advocacy groups cautioned that confining tax relief to dollar-pegged stablecoins would fail to address the compliance issues faced by millions of Americans who utilize cryptocurrency for daily transactions.
The letter was sent to Senate Finance Committee Chairman Michael Crapo and House Ways and Means Committee Chairman Jason Smith. It warns that proposals that restrict de minimis exemptions to payment stablecoins compliant with the GENIUS Act may undermine the goals of tax reform.
As lawmakers deliberate on simplifying tax reporting for cryptocurrency transactions, the IRS continues to classify crypto as property. This classification means that even purchasing a simple item, such as coffee, with Bitcoin results in a taxable event, which requires tracking the basis and calculating gains or losses.
“Imagine having to pay capital gains every time you swipe a card? It”s definitely discouraging crypto payments,” said Zakhil Suresh, the founder and CEO of crypto asset management firm BitSave. The letter advocates for cash-like treatment for GENIUS-compliant stablecoins, proposing no transaction or annual limits, akin to physical cash.
The coalition made the case that both stablecoins and network tokens must receive relief for effective policy implementation, citing that payment stablecoins rely on open blockchain networks that utilize separate network tokens for consensus, security, and transaction execution.
They also suggested a $600 limit per transaction and a $20,000 annual cap on these transactions to qualify for tax relief. Currently, about 45 million Americans are reported to own cryptocurrencies, with approximately 7 million having used Bitcoin or other network tokens for payments in 2024.
According to the letter, more than 3,500 merchants across the U.S. now accept Bitcoin, making it the leading jurisdiction for Bitcoin payments. This renewed push follows previous attempts that stalled, such as Senator Cynthia Lummis” efforts to attach crypto tax provisions to a reconciliation bill last July. The urgency of this issue has grown, particularly with new broker reporting rules taking effect on January 1, 2025, requiring digital asset sales to be reported using Form 1099-DA.
The coalition warns that without adequate de minimis relief, there could be widespread discrepancies and unnecessary audit risks, complicating reporting for transactions that may be relatively minor in economic significance.
