Simply put
- Jack Dorsey, the founder of Block, recently tweeted about the need for a minimal tax exemption on regular Bitcoin transactions, prompting a response from Senator Cynthia Lummis, who stated, “We’re working on it.”
- Lummis has encouraged supporters of the tax exemption to reach out to their representatives.
- This exemption was part of broader crypto tax reforms but was left out of President Trump’s reconciliation bill back in July after pro-crypto senators ran out of time before voting.
Block’s Jack Dorsey has called for some federal tax relief on everyday Bitcoin transactions. Just months ago, those advocating for cryptocurrency were pushing for fresh legislation as the opportunity to make important tax changes in President Trump’s significant reconciliation bill slipped away.
Dorsey tweeted: “Everyday Bitcoin transactions need at least some tax exemption.” His payment platform has plans to introduce a new Bitcoin wallet designed for small to medium businesses using the Square POS system.
In response to Dorsey’s tweet, Sen. Cynthia Lummis (R-WY) remarked, “We’re working on it. If you’re interested in this, please let your senator or congressman know.”
This discussion ties back to earlier efforts in July when Lummis tried to add crypto-friendly measures to Trump’s large-scale bill, but those failed before a vote set by Vice President J.D. Vance, who cast the pivotal vote.
The proposed amendments included a minimal exemption allowing Americans to bypass reporting crypto transactions under a few hundred dollars, which aligns with what Dorsey is requesting now.
Bitcoin and taxes
At present, the IRS views virtual currencies as property, meaning even small purchases trigger taxable events, placing a heavy reporting burden on both consumers and merchants.
In the chaotic final hours of negotiations on a settlement bill in July, pro-crypto senators and industry leaders worked to rally support for crypto advocates, focusing on minimal exemptions and other incentives for those dealing in digital assets.
Lummis described the proposal as a crucial move towards facilitating Bitcoin adoption, pledging to bring it back in a future Senate session.
Arthur Azizov, founder and investor at B2 Ventures, commented that the exemption is “a practical solution to the paperwork problem,” suggesting that it could encourage experimentation with Bitcoin among merchants and wallets.
Still, Azizov warned that just having the exemption won’t necessarily make Bitcoin a dependable payment option, as merchants could still take losses due to price fluctuations during conversions.
He pointed out that for these reforms to truly achieve broader merchant adoption, there needs to be a comprehensive package that includes clearer broker reporting guidelines, protections against fragmentation, and tools for converting to fiat currency.
Lummis and cryptocurrencies
Sen. Lummis is actively pursuing tax reforms related to virtual currencies from multiple angles.
In May, she joined Sen. Bernie Moreno (R-Ohio) in a letter to Treasury Secretary Scott Bessent, urging immediate action on Biden-era tax policies that threaten U.S. crypto companies with hefty taxes on unrealized gains.
“Neither Congress nor FASB planned for this outcome,” the senators noted. “This is an unintended consequence of incurring tax liabilities based on decisions made by private entities, rather than following established tax principles.”
