US lawmakers are weighing a change to long-debated crypto tax rules that could narrow relief for everyday users, prompting warnings from Bitcoin advocates that the shift would undermine the original purpose of the policy.
The issue centers on a proposed “de minimis” tax exemption, a rule meant to spare small crypto payments from capital gains taxes. Under current IRS guidance, digital assets are treated as property.
That means every purchase made with crypto, even a cup of coffee, counts as a taxable event that requires tracking cost basis and reporting gains or losses.
Supporters of the exemption say this framework makes daily use impractical and discourages crypto from functioning as money.
Bitcoin Groups Warn of Flawed Crypto Tax Exemption
The debate intensified this week after representatives of the Bitcoin Policy Institute, a nonprofit advocacy group, said lawmakers are considering limiting the exemption to stablecoins only.
Conner Brown, the group’s head of strategy, said on X that limiting a de minimis exemption to stablecoins would be a “severe mistake,” arguing that it would exclude ordinary Bitcoin payments from relief while favoring assets that rarely generate capital gains in the first place.
The idea behind the exemption is straightforward, allowing small personal crypto transactions to be excluded from capital gains reporting, similar to how foreign currency transactions are treated.
Most proposals have suggested a per-transaction threshold of around $300, paired with an annual cap of roughly $5,000 in total tax-free gains.
The concern raised by Bitcoin advocates is that recent drafts or negotiations may narrow the scope of the exemption to stablecoins.
Stablecoins are designed to maintain a steady price, usually pegged to the U.S. dollar, which means most transactions do not produce capital gains.
Critics argue that granting them a de minimis exemption offers little practical relief while leaving Bitcoin users facing the same reporting burden.
Some commentators have questioned the logic of prioritizing stablecoins. Marty Bent, founder of media outlet Truth for the Commoner, wrote on X that stablecoins “don’t change in value,” making a small-gain exemption unnecessary.
Can Bitcoin Be Used Like Cash? Lummis Thinks Taxes Are the Problem
Senator Cynthia Lummis of Wyoming has been one of the most vocal supporters of the idea. In July, she introduced legislation proposing a $300 exemption for crypto transactions, along with a $5,000 annual limit.
Her proposal also included exemptions for digital assets donated to charities and tax deferral for crypto earned through mining or staking.
Lummis has long argued that the exemption would make Bitcoin practical for everyday use, instead of something people are forced to treat only as a long-term holding.
That argument resurfaced in October when Block founder Jack Dorsey pressed lawmakers to lift tax rules that make daily Bitcoin payments difficult. Lummis replied publicly, saying she was working on the issue and urging supporters to speak up.
The exchange put fresh focus on a problem the crypto industry has raised for years. Bitcoin was introduced as a peer-to-peer electronic cash system.
Over time, however, transaction fees, slow settlement, and tax obligations have pushed most users toward holding rather than spending it.
As discussions continue, Congress appears closer than it has been in years to revisiting crypto tax rules.
In December, Representative Max Miller, who sits on the House Ways and Means Committee, said a draft bill on digital asset taxation has already circulated among lawmakers and could advance before the August 2026 recess.
Starting in 2026, the IRS plans to introduce new reporting rules, including 1099-DA forms from centralized exchanges, giving tax authorities a clearer picture of crypto activity.
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