De Minimis Exemption Could Boost Bitcoin Adoption and Revenue
A new report from Cornell's Brooks School Tech Policy Institute (BTPI) suggests that implementing a de minimis tax exemption for small Bitcoin purchases could have a positive impact on federal revenue and potentially increase demand for Bitcoin as a payment method.
The current tax system, which taxes all BTC and crypto payments, is seen as discouraging people from spending their assets due to the capital gains tax and complicated reporting process. According to Kraken, a crypto exchange that issued over 56 million tax forms in April this year, almost a third of those forms were for transactions worth less than $1.
The BTPI report estimates that a de minimis exemption could result in a 10-year net revenue gain of approximately $859 million, with the current base of 5.4 million digital-asset payment users not changing over the next decade. However, other legislative initiatives would limit the relief to regulated stablecoins only.
The effect on Bitcoin demand and its price is uncertain, but removing the extra costs and headache of paying with Bitcoin might increase adoption and help governments collect more capital gains-related taxes from larger Bitcoin payments and/or sales.