Bitcoin News Today: Bitcoin Tax Exemption Plan Sparks Debate on Crypto Inclusion

Senator Cynthia Lummis (R-WY) is advancing legislation to exempt small Bitcoin transactions from capital gains taxes, aligning with Jack Dorsey's advocacy for tax-free "everyday" crypto payments. The proposed bill introduces a $300 de minimis threshold per transaction and a $5,000 annual cap, aiming to reduce compliance burdens for consumers and merchants. Dorsey, founder of Block, recently urged lawmakers to adopt such a policy, coinciding with his company's expansion of Bitcoin payment tools for small businesses. Lummis, who previously championed the Digital Asset Tax Fairness Act, has reiterated her commitment to refining the proposal for future Senate sessions.

Under current IRS rules, cryptocurrencies are classified as property, requiring capital gains calculations for every transaction, regardless of size. This framework has been criticized as a barrier to Bitcoin's adoption as a functional currency rather than a speculative asset. The proposed exemption would treat small crypto payments similarly to fiat transactions, potentially simplifying compliance for users and fostering broader adoption. Supporters argue the change could stimulate economic activity by reducing administrative hurdles for merchants and consumers.

The initiative has sparked mixed reactions within the crypto community. Advocates praise Lummis' focus on Bitcoin as a practical step toward mainstream adoption, while critics argue the exemption excludes other payment-focused cryptocurrencies like Litecoin and Dash. Additionally, some question the prioritization of Bitcoin over a broader regulatory framework for all digital assets. Lummis has emphasized the need to balance innovation with tax clarity, stating that outdated policies risk stifling U.S. competitiveness in the digital asset sector.

Parallel efforts to reshape crypto taxation are underway. The Senate Finance Committee held a hearing in October 2025 to address challenges in implementing existing rules, including the Corporate Alternative Minimum Tax (CAMT) and broker reporting requirements. Testimony highlighted the IRS' struggles with processing the volume of crypto-related filings, with Coinbase executives warning of systemic unpreparedness. The committee also discussed interim guidance easing CAMT obligations for unrealized crypto gains, a move welcomed by companies like Strategy and MARA.

Lummis' broader legislative agenda includes reclassifying digital asset lending as non-taxable events and clarifying staking rewards under existing tax codes. These proposals aim to align crypto taxation with traditional financial instruments, such as securities lending, while addressing unique challenges like inflation adjustments and appraisal requirements for charitable donations. The senator has also pushed for expedited legislative action, with a goal of finalizing market structure reforms by year-end.

Global comparisons highlight the U.S.'s evolving stance. While countries like the UAE, Germany, and Portugal offer tax exemptions for long-term crypto holdings, the U.S. remains a key battleground for regulatory clarity. The outcome of Lummis' bill and related hearings will likely influence whether the U.S. maintains its leadership in crypto innovation or cedes ground to more accommodating jurisdictions.

Source: [1] https://cryptonews.com/news/working-on-it-senator-lummis-backs-jack-dorseys-push-for-a-bitcoin-tax-exemption/

[2] https://decrypt.co/343583/dorsey-lummis-push-for-bitcoin-tax-relief-as-block-expands-btc-payments

[3] https://www.lummis.senate.gov/press-releases/lummis-unveils-digital-asset-tax-legislation/

[4] https://www.coindesk.com/policy/2025/10/01/u-s-senate-hearing-on-crypto-taxes-reveals-headaches-for-both-industry-and-irs

[7] https://cointelegraph.com/news/us-treasury-relief-guidance-camt-senate-crypto-taxes-hearing

[10] https://cointelegraph.com/news/countries-where-crypto-is-tax-free

[12] https://bitmarkets.com/en/insights/article/from-haven-to-hurdles-crypto-tax-rules-worldwide