Using Bitcoin to buy groceries or pay bills seems easy. Under current U.S. tax law, that simply isn’t the case. All transactions, no matter how small, are taxable and must be reported to the IRS, so users must calculate capital gains on purchases as minor as a cup of coffee.
This legal reality has kept Bitcoin primarily in the hands of investors rather than in everyday wallets, and advocacy groups in Washington say Congress has only months left to fix the problem.
Shrinking room for action
The Bitcoin Policy Institute (BPI) has been operating in the halls of the Capitol for the past three months, meeting with 19 offices in both the House and Senate.
The group is calling for a minimum tax exemption, a rule that would allow small Bitcoin transactions below a set amount to avoid capital gains reporting altogether.
Source: Bitcoin Policy Institute
Based on BPI’s own timeline, the time frame for passing such a bill is between now and August 2026. After that, the pressure of the midterm elections is expected to crowd out any serious movement on the complex tax law.
Wyoming Sen. Cynthia Lummis has been one of the loudest voices in Congress on this issue. She introduced a standalone bill in July 2025 that would exempt cryptocurrency transactions of $300 or less, with an annual cap of $5,000.
The bill stalled. And Lummis is set to resign from the Senate in January 2027, and BPI warns that her departure could remove the issue’s most dedicated champion from the legislative arena for years.
Source: Bitcoin Policy Institute
Two bills, one goal – but no clear path forward
The legislative situation is complicated by competing proposals. While the Lummis bill targeted Bitcoin and broader crypto trading, a separate House bill filed by Rep. Max Miller and Rep. Stephen Horsford focused solely on dollar-pegged stablecoins.
Although BPI reports that bipartisan support for some form of exemption remains intact, the existence of two bills with different scopes obscures the path forward.
Pierre Roshard, director of Bitcoin finance company Strive, declared:
“The biggest obstacle to the adoption of Bitcoin payments is not technology expansion, but taxation.”
Burden of purchasing with Bitcoin
This sentence gets to the heart of what advocates are fighting for. The current tax treatment effectively penalizes those who try to spend Bitcoin without owning it.
All purchases require tracking the value of the asset at the time of acquisition and at the point of sale. This level of record keeping makes day-to-day transactions impractical for most people.
Minimal exemptions already exist in U.S. law for foreign currency transactions, giving advocates a precedent to draw from. Whether Congress will act on it before the political calendar concludes remains an open question, and BPI says the issue may not come up again for a long time.
Featured image from Unsplash, chart from TradingView
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