"Even a cup of coffee incurs a tax bomb"...Bitcoin Taxation Becomes an Obstacle to 'Cryptocurrency Payments'

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The U.S. tax system has been identified as the biggest obstacle to using Bitcoin (BTC) as a daily payment method. It has been pointed out that the taxation method, which does not align with the transaction structure, is hindering its actual use.

According to a report released on the 16th by the Washington-based think tank Cato Institute, current U.S. tax law classifies Bitcoin as an asset, not a currency. Under this structure, all transactions using Bitcoin are subject to capital gains tax.

Nicholas Anthony, a researcher at the Cato Institute, pointed out, “The current tax system does not fit the way Bitcoin is used.” He added, “The taxation structure is excessively complex for it to be used as a payment method.”

The problem is that the same applies to small-value payments. Even in a transaction to buy a cup of coffee, the user must calculate when and at what price they acquired that Bitcoin, what the price was at the time of payment, and whether any profit or loss occurred as a result.

This process transforms simple payments into complex tax processing, making actual use virtually difficult. The burden increases as transactions accumulate. The report explained that for individuals who frequently use Bitcoin, year-end tax filing documents could exceed dozens of pages.

This structure also directly impacts market behavior. The tendency to choose holding over payment is strengthened, leading to an analysis that Bitcoin functions as an investment asset rather than a practical payment method.

The report also proposed institutional improvements. It stated that it is necessary to exempt capital gains tax on cryptocurrency payments or to introduce a small-value exemption standard that excludes taxation for transactions below a certain amount.

Currently, a bill to exempt cryptocurrency transactions under $200 from taxation is being discussed in the U.S. Congress. However, the report pointed out that this standard does not sufficiently reflect the actual usage environment.

It has become clear that as long as the taxation structure remains, Bitcoin's payment function will inevitably be restricted. The regulatory framework continues to be disconnected from its intended use, leading to ongoing limitations in market utilization.

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