Jack Dorsey, the co-founder of Twitter and CEO of Block, is advocating for tax exemptions on small Bitcoin transactions to facilitate its use as everyday money. This comes as Square, a payment platform owned by Block, integrates Bitcoin payments into its checkout and point-of-sale systems. Dorsey envisions Bitcoin becoming the "native currency of the internet," offering an alternative to centralized financial systems.
Dorsey's call for a "de minimis" tax exemption aims to remove the capital gains burden on low-value Bitcoin payments, which has been a significant obstacle to its adoption as a medium of exchange in the U.S.. Under current U.S. tax law, every Bitcoin transaction is a taxable event, requiring holders to pay capital gains tax when the sale or payment value exceeds the purchase price, even for small purchases. This complexity has slowed Bitcoin's adoption as a payment currency.
To address this issue, Senator Cynthia Lummis (R-WY) is reportedly drafting legislation to exempt small Bitcoin transactions from capital gains taxes. Lummis confirmed she is "working on it" in response to Dorsey's post on X. Her proposal seeks to remove the tax burden on minor crypto purchases, such as buying coffee or groceries. The initiative builds upon her earlier Digital Asset Tax Fairness Act and follows previous attempts to pass similar measures.
Lummis's proposal mirrors exemptions already used in other countries to promote digital payments. Her Digital Asset Tax Fairness Act seeks to exempt Bitcoin and other crypto transactions under $300 from capital gains reporting, simplifying compliance for consumers and merchants. The plan sets a $300 threshold per transaction, capped at $5,000 annually, to simplify everyday BTC use. Adjustments and inflation indexing are expected to begin in 2026.
The proposed legislation has drawn mixed reactions within the crypto community. Advocates view it as a practical step toward broader adoption, while critics argue that it focuses too narrowly on Bitcoin, excluding other cryptocurrencies used for payments.
Dorsey's company, Block, is taking steps to integrate Bitcoin into retail payments. Square has launched a new Bitcoin payment wallet for retailers, allowing small businesses to convert daily sales into cryptocurrency with zero fees until 2027. Sellers on Square's network can opt to auto-convert part of their daily card takings into Bitcoin, and from November 10th, they will be able to accept Bitcoin payments directly and convert up to 50% of daily sales into the cryptocurrency. After January 1, 2027, Block plans to introduce a 1% processing fee per Bitcoin transaction. The feature will initially be available only in the United States, excluding New York, which has stricter digital currency regulations.
Square's integration of Bitcoin payments includes built-in wallets, enabling merchants to accept Bitcoin at checkout and optionally convert part of their revenue into the asset. Merchants can hold their BTC in a dedicated wallet within Square's existing dashboard, which also supports buying, selling, and withdrawals. This move is seen as a way to normalize Bitcoin at checkout and rapidly onboard millions of merchants into the crypto economy.
Block's shares have hit an 8-month high following the announcement of Bitcoin payments for the Square POS system. The company holds 8,692 BTC on its balance sheet.
