Don’t Forget to Include Your Starbucks Run on Your Tax Return
The one law that could make Bitcoin spendable in everyday life is inching forward — but Congress just tried to fix the problem for stablecoins while leaving Bitcoin out entirely.
Imagine paying for your morning coffee with Bitcoin and then having to file a capital gains report with the IRS because of it.
That’s not a hypothetical. That’s the law right now.
Every time you spend Bitcoin on anything — a coffee, a taxi, a takeaway — it counts as a disposal of property under US tax law. You have to calculate how much you paid for that Bitcoin, what it’s worth today, and report the difference as a capital gain. Even if the gain is a few cents.
It’s absurd. And it’s the single biggest reason Bitcoin hasn’t become a mainstream payment method despite the technology being more than ready for it.
The fix has a name: the De Minimis exemption. And it’s been agonisingly close to passing for years. But a new development in Congress has just thrown a spanner in the works — and if you hold Bitcoin, you need to know about it.
First, Let’s Understand the Problem Properly
Bitcoin is treated as property under US tax law. Not as currency. Property.
That means every single time you spend it, you’ve technically “sold” a piece of property. And selling property triggers capital gains tax on any increase in value since you bought it.
Here’s what that looks like in practice. Say you bought one Bitcoin when it was worth $10,000. It’s now worth $100,000. You want to spend $10 at Pret a Manger.
That $10 of Bitcoin originally cost you $1. So you just realised a $9 taxable capital gain. On a sandwich. You now need to record the date, the amount spent, your cost basis, the current price, and the gain. For a sandwich.
Multiply that across every coffee, every grocery run, every small purchase, and you can see why almost nobody actually spends Bitcoin at the till — even when merchants accept it. The accounting burden alone makes it impractical.
This isn’t Bitcoin being broken. The technology works fine. The Lightning Network — a payment layer built on top of Bitcoin — can process transactions instantly for fractions of a penny. Square, co-founded by Jack Dorsey, has been rolling out Lightning support to millions of merchants.
The rails are ready. The tax rules are the problem.
What a De Minimis Exemption Would Actually Do
De Minimis is Latin for “concerning minimal things.” In practice, it means: small transactions don’t count.
Congress already uses this logic elsewhere. If you travel abroad and make a small profit on foreign currency conversion — say the pound goes up slightly while you’re in London — you don’t have to report that as a capital gain. There’s a $200 de minimis threshold for personal foreign currency transactions. It would be bureaucratic madness to track every holiday purchase.
Bitcoin deserves the same treatment. A De Minimis exemption would mean: spend Bitcoin on everyday purchases below a set threshold, no tax calculation required, no IRS reporting needed. Treat it like cash for small payments.
Senator Cynthia Lummis has been the loudest voice pushing for this. In July 2025, she introduced a standalone bill proposing a $300 per-transaction threshold with a $5,000 annual cap. Below $300 a time, up to $5,000 a year in total — no capital gains reporting required. The Joint Committee on Taxation reviewed it and found it would actually be revenue-positive, generating around $600 million over ten years, because more people would use Bitcoin and pay tax on larger transactions.
The White House backed it. Treasury Secretary Bessent personally offered to have his Office of Tax Policy work with Lummis’s team on guidance. Bipartisan support existed. It seemed like it might finally happen.
Then Congress did what Congress does.
The Twist: A New Bill That Fixes It for Stablecoins but Not Bitcoin
In late March 2026, a new draft bill appeared in the House. Called the Parity Act, it was introduced by Representatives Max Miller and Steven Horsford with a de minimis exemption baked in.
Sounds good. Here’s the catch.
The Parity Act’s de minimis exemption applies to stablecoins only. Not Bitcoin. Not any other cryptocurrency. Just dollar-pegged stablecoins like USDC and USDT.
Think about what that actually means. Stablecoins are pegged to the dollar. They don’t appreciate. If you hold USDC and spend it, there’s no capital gain to calculate anyway — it’s worth $1 today, it was worth $1 when you bought it. So what is the Parity Act actually doing? In practice, it’s removing the reporting requirement for a disposal that always results in a gain of zero. The IRS technically still requires you to log every crypto disposal even when the gain is nothing. The Parity Act means you no longer have to file that paperwork for stablecoin transactions — but the paperwork always said $0 anyway. The bill also includes a clause saying stablecoins that deviate within 1% of their $1 peg are treated as having no gain, closing a technical micro-loophole for the rare moments USDC trades at $0.998 or $1.002. Useful for large businesses processing thousands of stablecoin transactions. Barely noticeable for anyone else.
Meanwhile, nobody spending Bitcoin on a coffee has been worrying about $0 disposal forms. They’ve been worrying about the very real $9 gain on that sandwich — and the Parity Act does absolutely nothing about that.
The Bitcoin Policy Institute — the main advocacy group pushing for Bitcoin tax reform — put it bluntly: “Rather than promoting parity, this draft picks winners and losers.” Their former counsel called it a bill that “sets America and Bitcoin back.”
Pierre Rochard, board member at Bitcoin treasury company Strive, was equally direct: “The number one impediment to Bitcoin payments adoption is tax policy, not scaling technology.” And yet the bill that’s actually moving through Congress addresses everything except the actual problem.
Why Would Congress Do This?
Follow the money — and the lobbying.
Stablecoin issuers and the exchanges that benefit from stablecoin volume have significant lobbying power in Washington right now. The GENIUS Act just passed, legitimising the stablecoin market. There’s momentum around stablecoins as part of America’s dollar dominance strategy.
Bitcoin, by contrast, competes with nothing. No company profits when you spend Bitcoin on coffee. There’s no corporate lobby pushing hard for Bitcoin’s spending use case in the way there is for stablecoin adoption.
The situation got messy enough that Jack Dorsey — a prominent Bitcoin advocate — publicly asked Coinbase’s CEO Brian Armstrong to address allegations that Coinbase had lobbied against a Bitcoin de minimis exemption. Coinbase executives denied it. But the fact that the question was being asked publicly tells you something about the temperature in Bitcoin circles right now.
The UK Picture Isn’t Much Better
If you’re reading this from the UK, the problem is slightly different but the frustration is the same.
The UK gives you an annual Capital Gains Tax allowance of £3,000. Anything below that in total gains across the year is tax-free. But it’s a yearly limit, not a per-transaction one. You still need to track every Bitcoin spend throughout the year to know where you stand against that allowance. The record-keeping burden doesn’t disappear.
And unlike the US, there’s no serious legislative push underway for a UK de minimis exemption. The US at least has politicians actively fighting for it.
Meanwhile, countries like the UAE, El Salvador, Singapore, Germany and Switzerland have either zero crypto tax or highly favourable treatment for long-held assets. The competitive pressure on the US and UK to get this right is real.
The Clock Is Ticking
Here’s where things stand right now.
The Bitcoin Policy Institute has been working with 19 Congressional offices to build support for including Bitcoin in any de minimis exemption. They’ve identified a window between now and August 2026 to get something passed before midterm election pressures consume the Senate calendar entirely.
Senator Lummis — the bill’s most committed champion — leaves the Senate in January 2027. If nothing passes before she goes, the advocates warn the opportunity may not return for years.
The irony is that all the ingredients for a solution exist. There’s bipartisan support for the concept. The White House has backed it. The Joint Committee on Taxation confirmed it wouldn’t cost revenue. The technology to spend Bitcoin is ready. The only missing piece is a law that says: small Bitcoin purchases don’t need to be reported to the IRS.
That’s it. That’s all it takes to unlock Bitcoin as a genuine payment method for everyday life.
Why This Matters More Than It Seems
Most people think of Bitcoin as something you hold and hope goes up. And right now, that’s mostly how it’s used — as a store of value, a hedge, a long-term bet.
But Bitcoin’s design has always pointed toward something bigger: a global, permissionless money that anyone can use, anywhere, without a bank. The Lightning Network makes that technically feasible today. Jack Dorsey’s Square is already bringing it to millions of merchants.
Tax policy is the last major non-technical barrier. Fix that, and Bitcoin stops being something you hold in a wallet and starts being something you actually spend — at the coffee shop, the market, online. That shift changes how the world thinks about it.
The Parity Act getting traction without Bitcoin in it isn’t just a policy disappointment. It’s a signal of how the lobbying battle for crypto’s future is being fought — and who’s winning it right now.
The next few months will tell us whether Bitcoin gets treated like money, or whether it stays in a category of its own while stablecoins quietly take the payments lane.
What do you think? Is a De Minimis exemption enough, or should everyday Bitcoin spending be treated like cash? Let me know in the comments.