Nicholas Anthony, a research fellow at the Cato Institute, is urging policymakers to eliminate capital gains taxes on Bitcoin and other cryptocurrencies to promote currency competition. In a recent report, Anthony argues that current capital gains tax (CGT) rules discourage people from using alternative currencies by encouraging long-term hoarding and imposing heavy reporting burdens on routine transactions.
Under present tax law, cryptocurrencies are treated as capital assets like stocks or real estate. That classification means everyday spending with crypto—buying a coffee, paying a bill—can trigger taxable events, create gain or loss calculations, and require detailed recordkeeping. Anthony says this turns ordinary commerce into an administrative nightmare: small, frequent purchases can balloon into dozens or even more than a hundred pages of tax paperwork for law‑abiding users.
To address those problems, Anthony lays out several policy options. The broadest approach is to abolish the capital gains tax entirely. Narrower alternatives include exempting crypto and foreign currency transactions from CGT so market competition can decide which forms of money prevail; carving out purchases of goods and services from CGT (with the caveat that proof requirements could create their own compliance headaches); or adopting a de minimis rule that taxes only gains above a set threshold.
Anthony emphasizes that simplifying the tax treatment of crypto would lower compliance costs, reduce taxpayer stress, and allow new monetary competitors to be evaluated on their merits rather than on tax-driven incentives. The Cato Institute, which has previously offered testimony to lawmakers on crypto matters, frames the change as removing the “government’s thumb on the scale” so competition can pick the best money.
Supporting Anthony’s recommendations, data point to growing real-world use: a 2025 National Cryptocurrency Association survey found 39% of U.S. crypto holders reported using crypto to buy goods and services, and research based on BTC Map data identified roughly 11,000 merchants worldwide that accept Bitcoin.
Anthony’s proposals aim to make spending crypto easier and less burdensome, while ensuring tax policy does not unintentionally favor certain monetary forms over others. Whether through full repeal, targeted exemptions, or a de minimis threshold, his central goal is clearer, simpler tax rules that foster a more competitive monetary environment.