The Cato Institute has called for the elimination of capital gains taxes on Bitcoin and other cryptocurrencies to foster currency competition. In a new report, policy scholar Nicholas Anthony argued the current tax structure discourages everyday spending by creating complex reporting burdens. He suggests removing these taxes would level the playing field and allow market competition to determine the best forms of money.
A prominent U.S. think tank is advocating for a major tax change to boost cryptocurrency adoption. The Cato Institute argues capital gains taxes should be removed from Bitcoin and other digital assets to allow for greater currency competition.
Policy scholar Nicholas Anthony stated the tax discourages using crypto as money by incentivizing holding over spending. He detailed how routine purchases, like daily coffee, can generate over 100 pages of tax filings due to reporting requirements.
Anthony proposed several potential solutions in his report. The simplest option is to end capital gains taxes entirely, though another is to exempt crypto and foreign currency transactions.
He noted a de minimis threshold could also be considered, where small transactions avoid taxation. “The only thing worse than getting robbed would be having the robber demand endless forms about the money they are taking from you. Taxes are no different,” Anthony said.
Current U.S. tax policy treats cryptocurrency similarly to stocks and real estate. This means using crypto to pay for goods or services can trigger a taxable event, according to investment firm VanEck.
Data indicates a significant portion of crypto holders use it for purchases. A 2025 survey by the National Cryptocurrency Association found 39% of U.S. holders reported using crypto for goods and services.
Globally, thousands of merchants accept Bitcoin. Academic publisher Springer Nature identified approximately 11,000 merchants worldwide using BTC Map data. The institute’s members have previously testified before lawmakers advocating for crypto policy changes.
