Bitcoin groups to Congress: Stablecoin-only tax relief misses how crypto payments actually work

U.S. lawmakers are edging toward tax relief for stablecoin payments. Bitcoin advocates argue that approach breaks on contact with reality.

In a Sunday letter to Senate Finance Chair Michael Crapo and House Ways and Means Chair Jason Smith, a coalition led by the Bitcoin Policy Institute—joined by Bitcoin Voter, Blocks, Crypto Council, the Digital Chamber, MoonPay, River, and others—asked Congress to widen de minimis exemptions beyond payment stablecoins. Their point is simple: if relief stops at dollar-pegged tokens, everyday transactions still trigger taxable events because the underlying networks run on separate tokens for security and fees.

That two-token architecture is the crux. Payment stablecoins—those aligned with the GENIUS Act signed in July—settle on open blockchains that require network tokens to process and finalize transactions. Granting cash-like treatment to GENIUS-compliant stablecoins while leaving Bitcoin and major network tokens taxable at every tap would preserve the very basis tracking headaches reform aims to reduce. You’d still need to calculate gains on gas or the base token used for execution, undercutting the user experience and merchant adoption.

The coalition’s package pairs breadth with guardrails: - Cash-like treatment for GENIUS-compliant payment stablecoins with no per-transaction or annual limits. - De minimis relief for Bitcoin and qualifying network tokens using objective thresholds: a $25 billion market capitalization cutoff, a $600 per-transaction limit, and a $20,000 annual cap.

Critics often underestimate how tax friction shapes behavior. The IRS still treats digital assets as property, so buying a coffee with Bitcoin remains a taxable event involving basis tracking and gain/loss calculations. As BitSave CEO Zakhil Suresh put it, treating every swipe like a capital gains moment discourages payments. That isn’t theoretical: roughly 45 million Americans hold crypto, and Federal Reserve data indicates about 7 million used Bitcoin or other network tokens for payments in 2024. More than 3,500 merchants across all 50 states now accept Bitcoin at the point of sale. If policy design adds compliance every time someone spends or covers network fees, many will simply opt out.

The proposal is also responsive to the clock. New broker rules require digital asset sales reporting on Form 1099-DA for transactions on or after January 1, 2025. Without calibrated de minimis relief, the coalition warns of widespread discrepancies and audit exposure disproportionate to the tiny economic value of routine transactions. I’ve seen similar dynamics in legacy payments: when reporting burdens exceed transaction utility, volume migrates to simpler rails—even if those rails are less innovative.

There is legislative momentum to tap. Senator Cynthia Lummis’s attempt to fold crypto tax amendments into President Donald Trump’s reconciliation bill stalled in July, but she signaled plans to reintroduce the idea. Jack Dorsey resurfaced the debate in October, advocating exemptions for everyday Bitcoin transactions as his company rolled out crypto-enabled wallets for small businesses.

One design choice deserves nuance: a $25 billion market cap floor for token eligibility would concentrate relief among established networks, arguably reducing tail risk and gaming. It may also entrench incumbents and slow competition from emerging protocols. A phased-in or reviewable threshold tied to liquidity and decentralization metrics could add flexibility without inviting abuse.

The practical path is clear: align tax treatment with how payments clear on-chain. Give GENIUS-compliant stablecoins true cash-like status, and extend measured de minimis relief to Bitcoin and major network tokens that secure and execute those payments. Do that, and the policy will match the technology—and the behavior policymakers say they want to encourage.