US tax code paralyzes Bitcoin's use as currency, says Cato Institute

U.S. Bitcoin users are burdened by harsh tax regulations that effectively paralyze the cryptocurrency's function as a currency, BeInCrypto reported. According to Nicholas Anthony, a researcher at the Cato Institute, current capital gains tax rules are the primary issue. He pointed out that for every Bitcoin transaction, users must record and report the acquisition date, usage date, original cost, and any profit or loss to the Internal Revenue Service (IRS). The report highlighted that a user who buys coffee with Bitcoin daily would need to file a tax return exceeding 100 pages at the end of the year. The study criticized the tax code for incentivizing long-term holding over its use as a medium of exchange, calling for legal reforms such as raising the exemption for small transactions or eliminating capital gains tax on virtual assets.