Jack Dorsey, founder of payments company Square, has called for a de minimis tax exemption on small Bitcoin (BTC) transactions, aiming to enhance the cryptocurrency’s utility for routine payments. Dorsey’s remarks came shortly after Square introduced Bitcoin payment options for merchants via its checkout and point-of-sale platforms.
“We want Bitcoin to be everyday money ASAP,” Dorsey stated, underscoring the importance of simplifying Bitcoin’s use in daily commerce. His comments highlight ongoing discussions around the challenges posed by current tax regulations that affect Bitcoin’s adoption as a practical medium of exchange.
In the United States, existing tax rules require taxpayers to report every Bitcoin transaction and pay capital gains tax on profits whenever the asset’s value increases from the initial purchase price. This policy has been criticized for discouraging Bitcoin’s use in small, frequent transactions, as reporting requirements and potential tax liabilities create friction.
Responding to such concerns, Wyoming Senator Cynthia Lummis proposed a legislative measure this July featuring a de minimis tax provision. Her proposal exempts Bitcoin transactions valued at $300 or less from capital gains tax, with an annual exemption limit of $5,000. This initiative seeks to alleviate regulatory burdens and promote BTC’s role as a peer-to-peer payment method, aligning with the vision outlined in Bitcoin’s original whitepaper.
Supporting these efforts, industry stakeholders have actively engaged with lawmakers. In October, the United States Senate Committee on Finance held a hearing to examine crypto tax policies amid the ongoing government shutdown.
Lawrence Zlatkin, Vice President of Tax at Coinbase, urged the committee to formally adopt a de minimis exemption for crypto payments under $300. Zlatkin emphasized that such a shift would foster retail crypto adoption and prevent payment innovation from moving offshore.
Several countries have already implemented favorable tax treatments for cryptocurrencies to attract investment and stimulate growth in their digital economies. Notable examples include the United Arab Emirates, Germany, and Portugal, each offering exemptions or reduced tax liabilities on certain crypto transactions.
These advantages make their jurisdictions appealing to crypto companies and funds, challenging the United States to maintain competitiveness in this rapidly evolving industry. By introducing targeted tax relief measures, proponents argue the US can better support the integration of Bitcoin into everyday financial activities.
As discussions on crypto taxation continue, Dorsey’s call for a de minimis exemption highlights the broader push to align tax policies with practical usage of digital assets. Enabling smaller Bitcoin transactions to be tax-exempt could lower barriers for consumers and merchants alike, potentially accelerating the adoption of Bitcoin as a form of digital cash beyond its role as a store-of-value asset.
