U.S. think tank calls for abolishing Bitcoin capital gains tax, to let Bitcoin and other cryptocurrencies compete freely

Recently, the U.S. think tank Cato Institute urged Congress to remove the capital gains tax levied on Bitcoin and other cryptocurrencies, arguing that the current tax system hinders competition among currencies and suppresses the usefulness of cryptocurrencies as a payment tool.

In a report released on Wednesday, Cato Institute policy scholar Nicholas Anthony said that the capital gains tax impedes the use of alternative currencies such as Bitcoin because it encourages long-term holding and increases the reporting burden on users.

He also noted that Bitcoin users are deeply troubled by tax season; even though using Bitcoin to make purchases is extremely convenient nowadays, the burden of tax law leaves law-abiding citizens suffering. For example, even if users only buy a cup of coffee in their daily routine, it could generate nearly a hundred pages of tax filing materials.

Anthony believes the most direct solution is to simply abolish the capital gains tax and create a more competitive market environment; another option is to eliminate the special capital gains tax for using cryptocurrencies and foreign currencies, thereby reducing government intervention and letting the market naturally determine the merits of different tokens
.

He also mentioned the “de minimis” scheme, under which capital gains tax is triggered only when users reach a certain threshold. He also cautioned that if users are required to prove that each transaction is for purchasing goods or services in order to qualify for an exemption, it could “create another compliance nightmare.”

Meanwhile, according to a 2025 survey by the U.S. National Crypto Association, 39% of U.S. cryptocurrency holders have used crypto assets to buy goods and services.

In addition, academic publishing company Springer Nature used BTC Ma tracking statistics to find that there are currently about 11,000 merchants worldwide that accept Bitcoin payments.

Overall, Anthony believes Congress should simplify the tax code so that ordinary Americans can easily meet compliance requirements. This would not only greatly ease the pressure on Americans during each tax-filing season, but also create a more competitive economic environment.

#Cryptocurrency capital gains tax