Key Insights:
- Bitcoin advocacy groups are pushing regulators to expand tax relief beyond stablecoins.
- They argue that focusing only on dollar-pegged tokens ignores how crypto is actually used.
- Millions of Americans use digital assets daily, but still face complex tax reporting rules.
Bitcoin advocacy groups are urging lawmakers to extend proposed tax relief beyond stablecoins to include Bitcoin and other widely used network tokens.
They argue that stablecoin only exemptions ignore how Americans actually use crypto and would do little to reduce the tax burden tied to everyday transactions.
Bitcoin Advocacy Groups Warn Providing Stablecoin Tax Relief Misses the Mark
The Bitcoin Policy Institute led the effort. It was joined by Bitcoin Voter, Blocks, the Crypto Council, the Digital Chamber, MoonPay, River, and several others.
Together, they sent a letter on Sunday to Senate Finance Committee Chair Michael Crapo and House Ways and Means Committee Chair Jason Smith.
In the letter, the coalition raised concerns about the direction of current tax proposals. It argued that limiting de minimis exemptions to payment stablecoins alone would weaken the intent of reform.
In their view, such a narrow approach fails to reflect how digital assets are actually used and risks leaving core tax challenges unresolved.
The letter lands at a sensitive moment in Washington. Lawmakers are still searching for ways to simplify tax reporting for crypto users.
For now, the IRS continues to classify crypto as property. As a result, even a small purchase, such as buying coffee with Bitcoin, creates a taxable event. That forces users to track cost basis and calculate gains or losses on everyday transactions.
Supporters of reform argue that this framework adds unnecessary friction. In their view, it discourages routine use and runs counter to the goal of making the tax system easier to navigate.
Alternative Framework For Regulators To Treat Stablecoins Like Cash
The letter also laid out a clear alternative. It called for a payment stablecoin that complies with the GENIUS framework to be treated like cash. Under that approach, everyday transactions would face no per-transaction or annual limits, mirroring how physical cash is handled.
The coalition said stablecoins cannot function on their own. They run on open blockchain networks that depend on separate network tokens to secure the system, validate transactions, and keep everything running smoothly. Without relief for both, the policy would fall short in real-world use.
To draw clear lines, the group suggested firm thresholds. It proposed limiting exemptions to network tokens with a market value of at least $25 billion. On top of that, it recommended a $600 cap per transaction and a $20,000 limit per year to balance usability with oversight.
The letter pointed to the scale of adoption. Around 45 million Americans now own crypto, with Bitcoin leading the market. Federal Reserve data suggests about 7 million Americans used Bitcoin or other network tokens to make payments in 2024.
Merchant adoption is also expanding. More than 3,500 businesses now accept Bitcoin at checkout across all 50 states, cementing the U.S. as the world’s largest market for Bitcoin payments.
The renewed push follows a recent setback. A similar effort stalled in July after Senator Cynthia Lummis was unable to add crypto tax provisions to President Donald Trump’s reconciliation bill.
The stablecoin tax debate resurfaced last October after Jack Dorsey weighed in. He pushed for federal tax exemptions on small, everyday Bitcoin transactions as Block rolled out crypto-enabled wallets for small businesses.
Since then, the pressure has only increased. New broker reporting rules now require digital asset transactions to be disclosed under Form 1099-DA for sales starting January 1, 2025.
The coalition said those requirements raise the stakes, especially for everyday users caught between growing adoption and tighter compliance.
Source: https://www.thecoinrepublic.com/2026/01/14/bitcoin-advocates-urge-u-s-lawmakers-on-stablecoin-tax-exemptions/
