Representatives from the Bitcoin Policy Institute (BPI), a nonprofit organization dedicated to promoting Bitcoin, have expressed concerns that U.S. legislators have not included a de minimis tax exemption for Bitcoin transactions under a specific amount.
Conner Brown, BPI’s strategy head, remarked on X that “De Minimis tax legislation may only apply to stablecoins, leaving routine Bitcoin transactions without any exemption,” labeling the omission of Bitcoin (BTC) as a “serious error.”
In July, Senator Cynthia Lummis from Wyoming proposed legislation aimed at establishing a de minimis tax exemption for cryptocurrency transactions valued at $300 or less and setting an annual cap of $5,000 on tax-free trades and sales.
This legislative proposal also encompassed exemptions for digital assets utilized in charitable contributions and offered deferrals on taxes for cryptocurrencies acquired through mining via proof-of-work (PoW) protocols or staking activities meant to secure blockchain networks.
Proponents of BTC argue that permitting tax exemptions on minor Bitcoin transactions would enhance its role as a medium of exchange rather than merely as an asset store of value. This shift could pave the way for a new financial system based on the principles of Bitcoin.
Source: Conner Brown
The debate surrounding de minimis tax exemptions has also sparked discussions about whether such benefits should extend to stablecoins designed to maintain consistent values.
Marty Bent, founder of Truth for The Commoner (TFTC), questioned this notion on X by stating, “Why would you even need a De Minimis tax exemption for stablecoins? They don’t fluctuate in value. This is absurd.”
Cointelegraph reached out to BPI regarding the proposed bill but had not received feedback by publication time.
Related: The new crypto taxation in Japan might awaken ‘sleeping giant’ retail investors
The Rise in Value of Bitcoin Yet Its Limited Use as Peer-to-Peer Cash
The original white paper outlining Bitcoin was penned by its anonymous creator Satoshi Nakamoto back in 2009 and describes it as a “peer-to-peer electronic cash system.”
Nevertheless, relatively high transaction fees combined with average block confirmation times nearing 10 minutes and capital gains taxes hinder BTC’s effectiveness as an actual payment method for goods and services.
A significant number of investors prefer holding onto their BTC long-term while sometimes borrowing fiat currency against their holdings to cover expenses or make everyday purchases.
The original white paper was released by Satoshi Nakamoto in 2009. Source: Satoshi Nakamoto Institute
The Lightning Network serves as an innovative second-layer protocol designed specifically for facilitating BTC payments; it operates by locking up designated amounts of BTC within payment channels established between two or more parties.
Participants connected through these channels can execute numerous off-chain transactions while only recording the final net balance onto the main blockchain ledger when closing said channel.
This approach significantly accelerates transaction speeds while reducing costs since users within these payment channels do not need to wait around for new blocks nor incur network fees with each transaction conducted among channel participants.
Magazine: All six global crypto hubs share one common trait…