Jack Dorsey’s Call for Bitcoin Tax Exemption
In a recent call to action, Jack Dorsey, the founder of payment service provider Block, has advocated for a federal tax exemption on everyday Bitcoin transactions. His plea comes as the company prepares to introduce a new crypto-integrated wallet, designed to facilitate Bitcoin payments especially for small businesses using the Square point-of-sale system. Dorsey utilized Twitter to express his views, encouraging people to rally support from their congressional representatives for a de minimis tax exemption. Senator Cynthia Lummis (R-WY) responded positively to his appeal.
Background on Crypto Tax Amendments
This initiative is reminiscent of Lummis’s attempts back in July to incorporate pro-crypto tax amendments into President Trump’s significant reconciliation bill, colloquially dubbed “One Big, Beautiful Bill.” Unfortunately, Lummis’s efforts did not make it to the Senate floor in time, particularly as Vice President J.D. Vance ended the legislative impasse with a tie-breaking vote. Among Lummis’s proposed changes was the de minimis exemption, which would permit Americans to conduct small-scale crypto transactions without triggering capital gains tax reporting, a notion that Dorsey now champions.
Current Tax Classification and Its Implications
As it stands, cryptocurrency is classified as property by the IRS, a status that imposes taxation on even minor purchases, thereby placing a heavy reporting burden on both consumers and retailers. During the final negotiations for the reconciliation bill, pro-crypto legislators and industry leaders worked diligently to include the de minimis exemption along with additional benefits tailored for crypto miners, traders, and businesses that utilize digital assets.
Future of Bitcoin Tax Reforms
Lummis has expressed her commitment to revisiting this proposal in future Senate sessions, emphasizing the crucial role it would play in enhancing Bitcoin’s acceptance. Arthur Azizov, the founder of B2 Ventures, commented to Decrypt that a de minimis exemption represents a pragmatic solution to the paperwork woes faced by businesses. However, he cautioned that such an exemption alone may not be sufficient to establish Bitcoin as a dependable payment method, particularly due to price volatility that could lead to financial losses between the point of sale and the conversion to fiat currency. To genuinely advance Bitcoin’s practical use, Azizov insisted that the exemption must be part of a broader reform package that includes clear reporting guidelines, protections against market fragmentation, and tools for seamless fiat conversion.
Ongoing Efforts for Crypto Tax Reforms
Lummis continues to actively pursue crypto tax reforms, having co-authored a letter in May with Senator Bernie Moreno (R-OH) directed to Treasury Secretary Scott Bessent. In the letter, they raised concerns about Biden-era tax policies that could subject American cryptocurrency firms to significant tax liabilities on unrealized gains—an outcome that neither Congress nor the Financial Accounting Standards Board intended, according to the senators, who are pushing for more coherent tax regulations based on sound principles rather than arbitrary standards from private entities.
