Representative Warren Davidson, a Republican from Ohio, introduced the Bitcoin for America Act in the House of Representatives on Thursday. The bill permits Americans to pay federal taxes in Bitcoin, directing those payments into the U.S. strategic Bitcoin reserve without triggering capital-gain taxes or recording losses or gains for taxpayers.
The legislation aims to expand the nation’s Bitcoin holdings by channeling tax payments directly into the reserve. Under the proposal, individuals and entities could settle their federal tax obligations using Bitcoin, bypassing traditional fiat currency transactions. This mechanism transfers the digital asset seamlessly to government custody, ensuring it contributes to the strategic reserve established earlier in the year. Davidson emphasized the potential benefits in a press release, stating: “By allowing taxpayers to pay federal taxes in Bitcoin and having the proceeds placed into the Strategic Bitcoin Reserve, the nation will benefit by having a tangible asset that appreciates over time, unlike the US dollar, which has steadily lost value under inflationary pressures.” This approach positions Bitcoin as a hedge against the dollar’s depreciation driven by ongoing inflation.
The bill’s structure enables the U.S. government to accumulate Bitcoin without engaging in open-market purchases. Such acquisitions would otherwise drive up Bitcoin’s price through increased demand from a major buyer like the government. By relying on voluntary tax payments, the reserve grows through existing revenue streams, maintaining budget neutrality and avoiding direct expenditure on cryptocurrency markets. This method aligns with constraints already in place for the reserve’s development.
President Donald Trump signed an executive order in March that formally created the U.S. strategic Bitcoin reserve. The order specified that the government would retain all Bitcoin obtained via asset seizure and forfeiture, prohibiting any sales of those holdings. However, it did not mandate ongoing purchases from the market. Instead, it required future reserve expansions to occur through budget-neutral financing, limiting aggressive accumulation strategies. Bitcoin’s price dropped approximately 6 percent right after the signing, as supporters anticipated a more dynamic growth plan involving regular buys that failed to materialize.
Critics have raised concerns about the reserve’s funding sources, particularly reliance on forfeited assets. Journalist and Bitcoin advocate Lola Leetz highlighted the risks, arguing that such methods incentivize excessive government seizures to bolster holdings. She stated: “Civil asset forfeiture should be reformed, not celebrated. If you are cheering this on, you should be ashamed of yourself.” Leetz’s position underscores broader debates on asset forfeiture practices and their implications for cryptocurrency ownership.
In contrast, Matt Hougan, chief investment officer at Bitwise, views the executive order favorably overall. He noted its stabilizing effects on Bitcoin’s regulatory landscape, explaining: “The strategic reserve dramatically lowers the probability of a government BTC ban and encourages nation‑state adoption, as other countries follow suit to remain competitive on the global stage.” Hougan’s assessment points to the order’s role in fostering international competition and reducing domestic regulatory threats to Bitcoin.
