Bitcoiners cry foul over US crypto tax bill that ‘picks winners and losers’

Bitcoiners are crying foul after US lawmakers released draft tax legislation that did not include a so-called de minimis exemption for low-value Bitcoin transactions.

The bill, dubbed the Parity Act, is meant to help stablecoins function more like cash by introducing a $200 de minimis exemption. That means that any stablecoin transaction under $200 would not require capital gains reporting.

Without such an exemption, using stablecoins to, say, purchase coffee would require extensive record-keeping, making such purchases impractical.

The bill also allows anyone engaged in “passive staking” or “passive validation” to defer reporting income from that activity. Currently, staking revenue is taxed at the value of crypto the moment it’s received. That pushes stakers to quickly sell their crypto proceeds — those who don’t risk paying outsize taxes if, for example, that crypto falls in value between the date it’s earned and the date it’s sold.

Crypto advocacy organisation The Digital Chamber celebrated the release of the draft bill on Friday.

“A modern tax framework is critical to keeping innovation in the US,” The Digital Chamber said in a statement on X, adding it “has led the charge through multiple tax roundtables on Capitol Hill, and we won’t stop until a common-sense framework is law.”

But the Bitcoin Policy Institute, a pro-Bitcoin think tank, took issue with the bill.

“Rather than promoting parity, this draft picks winners and losers,” the Bitcoin Policy Institute wrote in an analysis of the draft legislation.

“A person who buys a cup of coffee with bitcoin still faces a capital gains calculation. A de minimis exemption for everyday bitcoin transactions is necessary for the digital asset’s maturation as it grows into a global medium of exchange.”

It also faulted the bill’s staking language, which benefits so-called passive validators — those who don’t incur any business expenses.

“That definition structurally excludes Bitcoin miners, who by the nature of proof-of-work, incur significant costs for electricity, hardware, and infrastructure,” BPI said. “It creates a two-tier tax regime, offering deferral to stakers while leaving miners stuck with the same phantom income problem that both parties acknowledged needed fixing.”

The Digital Chamber CEO Cody Carbone said he would continue pushing for a de minimis exemption for Bitcoin.

“We need de minimis on bitcoin and will keep advocating that it’s added to this bill,” he wrote on X. “It’s just a discussion draft, not introduced yet - we’re not endorsing anything yet and will continue working daily to make sure it adds bitcoin.”

Behind-the-scenes lobbying over the bill attracted controversy in Bitcoin circles earlier this month, when Bitcoin influencers alleged US crypto exchange Coinbase had lobbied against a de minimis exemption for the original cryptocurrency.

The allegations were denied by several Coinbase executives.

The row even drew the attention of X founder turned Bitcoin evangelist Jack Dorsey, who asked Coinbase CEO Brian Armstrong to confirm his colleagues’ denials.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? You can reach him at aleks@dlnews.com.