Square Integrates Bitcoin Payments as Dorsey Urges Tax Relief on Small BTC Transactions
TLDR
- Jack Dorsey’s Square integrated Bitcoin payment services for businesses on October 9, 2025, with no fees through 2026
- Dorsey urged the US to adopt a de minimis tax exemption for everyday Bitcoin transactions to make BTC more practical for daily use
- Senator Cynthia Lummis introduced Senate Bill 2207 in July proposing a $300 transaction exemption from capital gains tax with a $5,000 annual cap
- Current IRS rules classify Bitcoin as property, requiring capital gains reporting on every transaction including small purchases like coffee
- Countries like UAE, Germany, and Portugal already offer favorable crypto tax treatment, giving them a competitive advantage over the US
Jack Dorsey made headlines on October 9 when he posted on social media that the United States needs a de minimis tax exemption for everyday Bitcoin transactions. The founder of Square announced the same day that his company integrated Bitcoin payment services for merchants using its checkout and point-of-sale systems.
Square will offer the Bitcoin payment option with no fees through 2026. The move aims to make Bitcoin more accessible for small businesses and their customers.
The current tax situation creates problems for Bitcoin users. The IRS classifies digital assets as property rather than currency. This means every Bitcoin transaction triggers a capital gains event that must be reported.
If someone buys Bitcoin and later uses it to purchase coffee, they must calculate and report any price increase. This applies even to transactions as small as a few dollars. The reporting requirement makes Bitcoin impractical for daily purchases.
Short-term capital gains on assets held less than a year face tax rates from 10% to 37%. Long-term holdings qualify for lower rates of 0%, 15%, or 20% based on income level.
Proposed Legislative Solution
Senator Lummis introduced Senate Bill 2207 in July to address the tax burden. The bill would exempt Bitcoin transactions of $300 or under from capital gains tax. It includes an annual exemption cap of $5,000.
Lawrence Zlatkin, vice president of tax at Coinbase, testified before the Senate Committee on Finance in October. He argued that a de minimis exemption would encourage crypto payments in retail commerce. Zlatkin said the exemption would help ensure payment innovation happens in the US rather than overseas.
International Competition
Several countries already offer favorable tax treatment for digital assets. The United Arab Emirates, Germany, and Portugal have implemented policies to attract crypto investment and business.
States within the US also vary widely in their approach. California, New York, and Hawaii impose combined tax rates exceeding 10% for top earners. Florida, Texas, Wyoming, Nevada, and South Dakota charge no state income tax on crypto gains.
Washington State applies a 7% excise tax on long-term capital gains over $250,000 despite having no income tax. This includes cryptocurrency transactions.
The US government shutdown has slowed cryptocurrency legislation efforts. Senate Banking Committee members are working on a digital asset bill to clarify oversight between the SEC and CFTC. The absence of agency staff to advise on regulatory scope has delayed progress.
Bitcoin traded at $121,025 on October 9, down 1% from previous levels. The price declined below key support levels as investors watched for Federal Reserve Chair Jerome Powell’s upcoming remarks.
The post Square Integrates Bitcoin Payments as Dorsey Urges Tax Relief on Small BTC Transactions appeared first on CoinCentral.
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