Jack Dorsey, the founder of Square, has called for a de minimis tax exemption on small Bitcoin (BTC) transactions to enhance the cryptocurrency’s practicality for daily transactions.
“We aim for Bitcoin to become everyday money as soon as possible,” Dorsey stated on Wednesday, following Square’s integration of Bitcoin payment options for merchants using its checkout and point-of-sale systems.
His remarks were noted by Wyoming Senator Cynthia Lummis, who proposed a de minimis tax element within a separate crypto tax bill in July, exempting BTC transactions of $300 or less from capital gains tax, with an annual exemption limit of $5,000.
As per existing US tax regulations, all Bitcoin transactions incur capital gains tax, which must be paid by the holder if BTC’s price exceeds their initial purchase price, hindering Bitcoin’s role as a medium of exchange.
Bitcoin proponents persist in advocating for tax exemptions on smaller BTC transactions to promote the use of the digital currency as a peer-to-peer cash system envisioned by BTC creator Satoshi Nakamoto in their whitepaper, while also serving as a store-of-value asset.
Related: US lawmakers face challenges with crypto tax policy amid government shutdown
Crypto industry leaders and advocates advocate for tax exemption
The United States Senate Committee on Finance convened in October to address crypto tax regulations during the US government shutdown.
Lawrence Zlatkin, vice president of tax at crypto exchange Coinbase, urged the Senate to formalize a de minimis tax exemption for crypto transactions up to $300.
Zlatkin contended that the exemption would promote crypto payments in retail and guarantee that payment innovations occur within the US instead of overseas.
Many regions already offer favorable tax regulations on digital assets to attract investment, including the United Arab Emirates (UAE), Germany, and Portugal.
This advantageous tax treatment in other nations draws crypto companies and funds to set up operations there, placing the US at a competitive disadvantage relative to these early adopters.
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