Cato Institute Urges U.S. to Remove Crypto Capital Gains Tax to Boost Currency Competition

The Cato Institute, a Washington, D.C.–based public policy think tank, has called on the United States government to eliminate capital gains taxes on cryptocurrencies such as Bitcoin to encourage broader currency competition. Policy scholar Nicholas Anthony argued that current tax rules discourage the everyday use of digital assets as payment methods.

Under existing U.S. law, using crypto to purchase goods or services can trigger a taxable event, similar to selling stocks or real estate. Anthony noted that frequent small transactions such as daily purchases can result in complex reporting requirements, making crypto less practical as a currency.

Alternative Tax Models Under Consideration

Anthony suggested that fully removing capital gains taxes would be the simplest approach. However, he also outlined other possible solutions, including eliminating taxes only on cryptocurrency and foreign currency transactions to encourage monetary competition.

Another option discussed was introducing a de minimis tax rule, which would exempt small transactions from capital gains reporting. While partial exemptions could reduce the burden, Anthony warned they might still create compliance challenges if users must verify transaction details.

Growing Crypto Adoption Strengthens Policy Debate

Data cited in the report shows that crypto usage for payments continues to expand. A 2025 survey by the National Crypto Association found that 39% of U.S. crypto holders reported using digital assets to purchase goods and services.

Additionally, research from Springer Nature identified approximately 11,000 merchants worldwide accepting Bitcoin payments, highlighting the growing relevance of digital currencies in global commerce.

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.