Back
Cato Institute Urges U.S. to End Capital Gains Tax on Crypto

Cato Institute Urges U.S. to End Capital Gains Tax on Crypto

Nicholas Anthony of the Cato Institute says current U.S. tax treatment discourages Bitcoin and other cryptocurrencies from being used as everyday payment methods.

BTC

Fact Check
The claim is well supported by the validated Cointelegraph article "US should scrap crypto capital gains tax to fuel competition: Cato," which explicitly says Nicholas Anthony argued that US capital gains tax rules discourage using Bitcoin and other cryptocurrencies as currency because they incentivize holding and impose burdensome reporting for everyday spending. This is independently echoed by the validated PANews article "智库Cato：美国应取消加密资本利得税以促进货币竞争 | PANews" and the validated CoinPost article "米シンクタンク、ビットコイン課税制度の抜本改革を提言," both of which describe Anthony making the same point about everyday payments. The primary-source Cato page "Bitcoin Taxes Make No Sense | Cato at Liberty Blog" was located but could not be fetched due to blocking, so confidence is medium rather than high. The wording "urges U.S. to end capital gains tax on crypto" is somewhat stronger than the user’s content, because the reporting indicates Anthony presented full repeal as the simplest option while also discussing narrower alternatives such as exemptions or de minimis treatment. Even so, the core statement that he says current tax treatment discourages everyday crypto payments is strongly supported.
    Reference: 12
Summary

The Cato Institute urged the U.S. government to eliminate capital gains tax on Bitcoin and other cryptocurrencies, arguing that current rules make routine crypto spending impractical. Policy scholar Nicholas Anthony said treating each crypto payment as a taxable event discourages Bitcoin’s use as an alternative currency and can force users to generate more than 100 pages of tax filings even for everyday purchases such as coffee.

Terms & Concepts
  • Capital gains tax: A tax on profit made when an asset is sold or exchanged for more than its purchase price.
  • Bitcoin: A decentralized digital currency that can be transferred without a central intermediary and is often used as both an investment asset and payment method.
  • Taxable event: A transaction that triggers a tax reporting obligation, such as selling or spending cryptocurrency under current rules.