Cato Institute: U.S. Bitcoin Tax Rules Hinder Daily Payment Applications, Call for Reform

Deep Tide TechFlow News, April 16, according to The Block, the Washington think tank Cato Institute published an article criticizing the current U.S. Bitcoin tax policy. Researcher Nick Anthony pointed out that the current tax framework, which treats Bitcoin as “property” rather than “currency,” requires users to calculate capital gains or losses for each transaction separately, even for everyday small purchases—no exception—making tax filing extremely cumbersome and effectively hindering the adoption of Bitcoin as a payment tool.

In response, the Cato Institute put forward several reform proposals, including completely abolishing capital gains tax on cryptocurrency payments and introducing a small-transaction tax-exemption threshold. The report also mentioned the existing “Virtual Currency Tax Fairness Act”—the bill would exempt crypto transactions below 200 U.S. dollars—but Anthony believes this threshold is too low to cover consumers’ actual spending levels. At present, the Trump administration has indicated support for establishing a small tax-exemption for crypto transactions and will continue to evaluate relevant legislative options.