Bitcoin News Today: Dorsey, Lummis Push Tax Exemption to Make Bitcoin a Usable Currency

Jack Dorsey, founder of Block (formerly Square), has reiterated calls for a de minimis tax exemption on small Bitcoin transactions to facilitate its adoption as a practical medium of exchange. The proposal, which Dorsey outlined in a recent X post, aligns with broader industry efforts to reduce regulatory and tax barriers for everyday crypto use. His advocacy follows the launch of Block's new Bitcoin payment and wallet tools for small businesses, underscoring the company's strategic push to integrate Bitcoin into mainstream commerce.

Senator Cynthia Lummis (R-WY), a vocal proponent of crypto-friendly policy, has responded to Dorsey's call by advancing legislation that would exempt transactions under $300 from capital gains reporting, with an annual cap of $5,000 per taxpayer. The proposed rule, part of Lummis' standalone Digital Asset Tax Fairness Act, aims to address the IRS's current treatment of Bitcoin as property, which subjects even minor transactions-such as buying coffee or groceries-to taxable events. This approach has long been criticized for creating compliance burdens for both consumers and merchants, hindering Bitcoin's utility as a payment method.

The exemption is a revival of previously stalled efforts to include similar provisions in President Donald Trump's July reconciliation bill, which failed to pass due to time constraints before the Senate vote. Lummis has emphasized that the reform is critical to aligning U.S. tax policy with the practical realities of digital asset usage, particularly as other jurisdictions like Germany, Portugal, and the UAE implement favorable tax regimes to attract crypto innovation. The senator's bill also includes broader tax reforms, such as deferring income recognition for staking and mining rewards until assets are sold, and expanding securities-lending rules to cover digital assets.

Industry stakeholders have highlighted both the potential benefits and limitations of the exemption. Arthur Azizov, founder of B2 Ventures, noted that a de minimis threshold could reduce administrative friction for merchants experimenting with Bitcoin, but cautioned that it alone would not resolve volatility-related risks for businesses. He emphasized the need for complementary measures, including anti-fragmentation protections and fiat-conversion tools, to make Bitcoin a viable payment system. Meanwhile, the Tax Law Center expressed concerns that such exemptions could create preferential treatment for digital assets, potentially undermining tax equity and enabling evasion.

The debate reflects a broader push to modernize U.S. tax policy for the digital economy. While the IRS maintains its classification of crypto as property, recent legislative developments-such as the GENIUS Act's stablecoin regulations and the CLARITY Bill's framework for asset classification-have not yet altered the core tax treatment. Lummis' bill, however, represents a direct attempt to bridge this gap by simplifying compliance for small transactions while addressing industry-specific challenges like double taxation for miners and stakers.

As the legislation moves forward, its success will depend on bipartisan support and the ability to balance innovation incentives with tax fairness. Dorsey's endorsement and the growing momentum in Congress signal a pivotal moment for Bitcoin's integration into everyday commerce, though the path to enactment remains uncertain.

Source: [1] Decrypt (https://decrypt.co/343583/dorsey-lummis-push-for-bitcoin-tax-relief-as-block-expands-btc-payments) [2] Cointelegraph (https://cointelegraph.com/news/jack-dorsey-tax-exemption-bitcoin-transactions) [3] Finance Feeds (https://financefeeds.com/jack-dorsey-calls-for-u-s-tax-relief-on-bitcoin-payments) [4] Forbes (https://www.forbes.com/sites/greatspeculations/2025/07/24/crypto-tax-implications-after-the-genius-act/) [5] Lummis Senate Press Release (https://www.lummis.senate.gov/press-releases/lummis-unveils-digital-asset-tax-legislation) [6] Tax Law Center (https://taxlawcenter.org/blog/lummis-bill-would-provide-new-rules-for-digital-assets)