“De minimis” has gotten a lot of airplay in discussions about the regulation and taxation of crypto.[1] De minimis comes from the Latin maxim, "de minimis non curat lex," translating to "the law does not concern itself with trifles." Much U.S. law is rooted in Early English common law, and by extension, Roman law with all its Latin vernacular.[2] According to Wex,[3] “De minimis is something that is very trifling or of little importance. [It] usually refers to something so small, whether in dollar terms, importance, or severity, that the law will not consider it.”

Concerning trifles

The de minimis doctrine seeks to keep trivial matters from clogging up the court system; it keeps a party from bringing up unrelated, insignificant things; it results in the dismissal of some lawsuits;[4] and it can help a taxpayer to avoid the burden of reporting and paying taxes on tiny monetary amounts.

De minimis has been applied to many areas of U.S. regulation and taxation. De minimis tax exceptions and exclusions range, for example, from tiny wage claims, to fringe benefits, to capital gains on certain profits when bonds reach maturation, to taxation on the personal use of foreign currency.

In determining whether a situation meets the definition of de minimis, legal systems, regulators and courts consider (1) whether the related time and tasks can be accurately captured and recorded; (2) the monies involved; (3) whether work performed is irregular or scheduled;[5] and (4) the frequency with which tasks are conducted. In determining whether something is a trifle that the law should not concern itself with, courts consider work, accrual, advantage, and frequency of related actions.

Proposals for a digital asset de minimis exemption

The U.S. Congress has been asked to consider enactment of a de minimis tax exemption for the use of certain digital assets for various types of transactions. In July of 2025, Senator Cynthia Lummis introduced S.2207, a digital asset tax bill that addresses various tax topics including a $300 de minimis exemption for “personal transactions,” with a yearly cap on non-taxable gains of $5,000 per year.[6] More recently, Representatives Max Miller and Steven Horsford released a proposed working draft (Draft House Bill) addressing various crypto tax issues, including a de minimis exemption. The working draft includes a framework, summaries, and notes—it was released on December 20, 2025, and its bipartisan sponsors refer to it as a “work in progress.”[7]

Neither S.2207 nor the Draft House Bill have moved forward at the time of this writing. S.2207 has been referred to the Senate Committee on Finance, and the Draft House Bill has been released by its sponsors along with a press release.

Let’s look at these very different Senate and House approaches, and then compare them to application precedent with respect to the de minimis exemption currently available for foreign currency personal use transactions. I’ll end this piece by looking at some key policy considerations for adopting a digital asset de minimis exemption before I wrap up this series.

The Senate Proposition

Let’s start with a look at S.2207.[8] In general, it provides that de minimis gain or loss from the sale, exchange, or disposition of digital assets is not included in gross income when used to purchase products or services in personal transactions. Under S.2207, the de minimis exemption would be limited so that it would not apply to (1) sales or exchanges for “cash or cash equivalents (including payment stablecoins)”; (2) “property used in an active trade or business”; or (3) “property held for income production.”[9]

Subject to an inflation adjustment and a sunset provision, S.2207 provides that the total gain or loss from the sale, exchange, or disposition of digital assets to acquire products or services could not exceed $300, and the amount of total gain excluded in a tax year could not exceed $5,000. Transactions over $300 in gain or over $300 in loss are not eligible for the de minimis exemption, while eligible transactions are capped at $5,000 in the aggregate.

S.2207 provides an anti-abuse rule so that the de minimis provision would not apply to the sale, exchange, or disposition of digital assets “where the primary purpose is to eliminate gains.” Further, S. 2207 would authorize the Treasury Secretary to issue regulations or guidance in setting anti-abuse standards that would be consistent with the purpose of the de minimis exemption.

S.2207 does nothing to alleviate tax requirements to keep accurate books and records. Taxpayers would still need to “maintain books and records or separate wallets or accounts” (as determined by the Treasury Secretary) that distinguish between eligible and ineligible transactions. In other words, taxpayers would need to keep track of the tax basis in their digital assets, as well as the fair market value of the items or services acquired with their digital assets to calculate gain or loss. Transactions that exceeded the $300 gain or loss amount would need to be reported, just as all transactions above the aggregate annual limitation of $5,000 would need to be reported as well. An inflation adjustment would kick in after 2026, terminating after December 31, 2035, when the de minimis provision would be set to expire.

The House Proposition

The Draft House Bill[10]—in some ways—takes a more targeted approach to a de minimis exemption. It limits the de minimis provision to “Regulated Payment Stablecoins” as they are defined in the GENIUS Act, and provided the stablecoins meet three requirements.[11]

First, the issuer would need to be a “permitted payment stablecoin issuer” (Issuer). Second, the stablecoin would be pegged solely to the U.S. dollar (Pegged). Third, it would need to have market price stability (Price Stability). A Regulated Payment Stablecoin that meets these three requirements is referred to as a Qualified Stablecoin. The Draft House Bill is narrower than S.2207, because the Senate Bill covers digital assets generally, but the Draft House Bill focuses only on Qualified Stablecoins, which are a subset of stablecoins that are intended to generate—at most—small amounts of gain or loss on disposition.

Although proposed legislative language has not been provided yet, the Draft House Bill framework suggests that when the Miller-Horsford Bill is finalized, the de minimis exemption will include a per-transaction maximum exemption amount cap. An explanatory note claims there is an intent to include a $200-per-transaction threshold, with “technical drafting [remaining] ongoing with respect to whether, and to what extent, an aggregate annual limitation is appropriate to ensure the provision operates as an ‘administrative simplification rather than a mechanism for sheltering investment gains.’” In addition, Regulations and Guidance would be expected to include “targeted anti-abuse rules to prevent the avoidance of tax.”

Comparison between the two current digital asset de minimis exemption proposals

Let’s compare the digital asset de minimis exemptions as they are proposed in the Draft House Bill with S.2207. In doing so, let’s also go back to our core considerations in defining “de minimis”: (1) feasibility of accurately capturing and recording time and tasks, (2) monies involved, (3) irregular or scheduled work, and (4) frequency (work, accrual, advantage, and frequency). Let’s apply these concepts to the current proposals.

Concentration: The Draft House Bill limits its scope to a subset of stablecoin transactions. It addresses gain or loss on those stablecoins that meet the definition of “Qualified Stablecoins.” With such a narrow focus, the de minimis exemption would allow taxpayers to minimize the burden of reporting truly insignificant amounts on gain or loss on their transactions. The Draft House Bill de minimis limitation to Qualified Stablecoins, by definition, excludes other types of digital assets. This would allow taxpayers to avoid paying taxes on what are expected to be truly tiny monetary amounts. By limiting its application to Qualified Stablecoins, the amount of gain or loss on these transactions would, in fact, be de minimis. That is, gain or loss would be “trivial” and insignificant. The Draft House Bill focuses on feasibility, monies, irregularity, and frequency.

Turning to S.2207, it proposes to cover all digital assets used in “qualifying transactions” involving the purchase of personal products or services. This “de minimis” exemption does not appear to meet the definition of de minimis. The focus of S.2207 is on the type of transaction, which is likely to be broadly interpreted.

Limits: S.2207 proposes a $300 per transaction cap and an annual tax-exemption cap of $5,000. The Draft House Bill defines Qualified Stablecoins in a way that the legislative language, when proposed, might not include an annual cap if the sponsors were to conclude that a cap would not be necessary.

Burden: S.2207 does not appear to ease taxpayers’ recordkeeping and reporting obligations. The Draft House Bill, however, might provide some slight relief to taxpayers because it is limited to Qualified Stablecoins. The subset of applicable transactions that qualify as Qualified Stablecoins is likely to be manageable.

Comparison between the proposed digital asset de minimis exemption with the current de minimis exemption for personal use of foreign currency

Advocates of a digital asset de minimis exemption often seek to advance their argument through comparison with the de minimis tax exemption currently available for certain foreign currency transactions. As I mentioned above, limiting the scope of application to a subset of transactions is one critical concept when determining if potential applications do actually fit within the de minimis definition.

The foreign currency de minimis exemption at Code Section 988(e)(2) is limited in its scope, and, accordingly, its usage.[12] When an individual taxpayer disposes of a non-functional currency in a personal transaction, gain is not recognized, subject to several limitations. First, gains cannot exceed $200 per transaction. Second, expenses allocable to the foreign currency transaction must be for personal use. In other words, the expenses eligible for de minimis coverage cannot be significant in amount, or incurred during the course of doing business (under Code Section 162[13]), or be associated with investment activities (under Code Section 212[14]).

Most consumer-oriented U.S. businesses conduct their transactions in U.S. dollars. It is not customary for the local coffee shop to accept foreign currency as a form of payment. Accordingly, U.S. taxpayers do not choose to use foreign currencies to make personal purchases in the United States: most would do so infrequently, if ever, on U.S. soil.

The foreign currency de minimis exemption is crystal clear in its intent: It is used when taxpayers are traveling outside of the United States.

The number of personal transactions conducted in foreign currencies is likely to be de minimis in comparison to the number of personal digital assets transactions as proposed by S. 2207.

Digital assets are a new investment asset class that the crypto industry is keen to transform into a medium of exchange, hopeful that digital assets could eventually compete with the U.S. dollar. At present, people do not use digital assets to buy consumer products in the United States to any significant extent. Even though digital assets have been available as means of making payments since the mid-2010s, their usage for payments has declined.[15] In fact, the percentage of consumers who use digital assets for payments stood at less than two percent across all asset classes in 2022.

If the intent is to transform digital assets into a medium of exchange, a de minimis exemption is probably not the way to go.

The Tax Issue

Under current law, every time a digital asset is used to buy, for example, a cup of coffee, the holder has a taxable event. This is the same result if the customer were to pay for that cup of coffee with anything other than U.S. currency—a share of stock or an antique Roman coin. Paying for goods and services in U.S. currency does not trigger gain or loss because there is no gain or loss on the sale, exchange, or disposition of U.S. currency. U.S. currency is treated as “currency,” not as property, for taxable purposes.

Obviously, providing tax subsidies for digital assets would make them more attractive than other investments that do not enjoy similar tax exemptions. Accordingly, attention to what de minimis actually means is critical. The proposed exemption in the Draft House Bill looks like it could be limited to situations that are actually de minimis, while the exemption proposed in S.2207 is anything but de minimis. In fact, it appears likely that people would turn to using crypto to use up the tax-free de minimis allotments.

Policy considerations

A de minimis exemption should be limited to situations that are truly de minimis. If a de minimis exemption is applied more broadly, it would create an investment opportunity that is not available to other types of investment assets. In short, a digital asset de minimis exemption would create an advantage for digital assets that is not otherwise available to any other classes of investment assets.

In considering the wisdom of a digital asset de minimis exemption, Congress should look at the following issues:

• A digital assets de minimis exemption of any type provides a tax subsidy not otherwise available to any other investment assets.
• A broadly drafted digital asset de minimis exemption could force a seismic shift towards the use of digital assets.
• Although the foreign currency de minimis exemption being advanced as support for a similar exemption for digital assets, the analogy is tenuous, at best. The use case for personal use foreign currency is significantly more limited than it would be for a digital asset exemption.
• A de minimis provision would not reduce recordkeeping but it would encourage the use of digital assets as a medium of exchange. It would become digital “cash” to compete with the U.S. dollar as a method of payment.
• If Congress were to limit the exemption to goods and services used for personal purposes, it would be important to precisely define the scope of “personal use.” Misunderstandings and ambiguities would lead to opportunities for taxpayer abuse.
• A key reason given in support of a de minimis exemption is that recordkeeping and reporting on small transactions creates an enormous burden on taxpayers and negatively impacts IRS enforcement efforts. In my view, the recordkeeping and reporting concerns are blown out of proportion.
  • Taxpayers would need to maintain similar (if not, identical) books and records with a de minimis exemption in place as they would need to maintain without such an exemption. Taxpayers would still need to track all of their digital asset acquisitions and their tax basis as well as the fair market value of their expenditures for goods and services. Taxpayers would need to be able to track all of their gains and losses on digital assets to successfully demonstrate compliance with the de minimis exemption.
  • Many taxpayers rely on bookkeepers or “calculator apps” to track relevant information about their digital asset transactions. In these situations, the information needed to determine taxable income would be readily available to them.
  • The IRS would have the same obligations with a de minimis exemption as it would have without such an exemption. The IRS would still need to examine, and taxpayers would still need to make available books and records on audit without regard to whether or not there is a de minimis exemption in place.

The Draft House Bill appears likely to meet the definition of de minimis transactions. This is because the amounts of excluded income and loss are likely to apply to something small, or trivial. Limiting the exemption to Qualified Stablecoins, that is, those “permitted payment stablecoins” that meet the three additional requirements set out above.

Treasury Regulations currently provide a $10,000 de minimis exemption threshold on the reporting of certain stablecoins. Sales or exchanges over this amount are reportable on an aggregate basis.[16] Although limited to certain stablecoins, it is not clear why additional reporting relief might be appropriate.

Anti-abuse considerations

Anti-abuse rules are needed to prevent taxpayers from “gaming the system.” Congress should consider the following when thinking about anti-abuse rules:

• Unless a maximum aggregate dollar amount cap is imposed and enforced, some taxpayers will avoid most (if not all) of their gains on “personal transactions,” attempting to broadly define them.
• If an aggregate cap is imposed, transactions between related parties and crypto wallets would need to be tracked so that taxpayers cannot work around that cap and engage in “double dipping.”
• Unlike other investment assets, digital assets can be divided into smaller and smaller fractional units. Transactions could be divided and structured to fit below any de minimis dollar amount threshold. Writing watertight anti-abuse rules around this scenario would be challenging.
• How can the government oversee an anti-abuse rule if it looks to the taxpayer’s “principal purpose” of eliminating gains?

Conclusion

With the conclusion of this discussion, we also conclude this Subject Matters series on Crypto. Crypto is one of the most important innovations in finance. In fact, it could be argued that crypto is the most important market disruptor in the past century of finance.

Blockchain applications are being adopted across the board at lightning speed. Nations are racing to update their regulatory and tax frameworks to counter tax evasion and fraud perpetuated by organized crime syndicates in unregulated crypto marketplaces. The United States is working hard to address domestic crypto oversight, share best practices with other governments, and develop cross-border cooperation.

The United States participates in the Global Forum on Transparency and Exchange of Information for Tax Purposes, led by the Organisation for Economic Co-operation and Development (OECD), and has pledged to implement the Crypto-Asset Reporting Framework (CARF) to begin automatic exchange of information on crypto assets held by U.S. taxpayers in non-U.S. CARF-compliant jurisdictions by 2029.[17] These national and international efforts have much to do in helping oversee the management of the extraordinary rewards as well as the outsized risks associated with the crypto markets.

In this series, we have covered the tax landscape; the implications for those who participate as buyers and sellers in the crypto markets; addressed miners and stakers who validate and help expand blockchain networks; and considered those entities and individuals who seek to invest in the broader development of crypto products and transactions in the United States.

I have touched on a number of core policy considerations that are currently under consideration by Congress. I wanted to write about some of the topics that I believe to be of greatest importance in these ongoing deliberations, including mark-to-market reporting, anti-abuse rules, and the trading safe harbor to encourage international investment in U.S. crypto markets. These topics are all of critical concern in rolling out U.S. regulations that are equitable and fair in ensuring access to the crypto market while providing proper protections for all stakeholders.

Crypto has become part of the popular vernacular, as well as part of a populist democratization message in the 21st century. The debate over a digital asset de minimis exemption is a good place to conclude this series. The de minimis exemption has been interpreted as being synonymous with the idea of fair treatment for the everyday person. In part, crypto and the decentralized finance system that it represents are supposed to be about the democratization of finance. They are supposed to be about the ability of average Americans to build their own lives, to develop their own assets, and to create their own success in places that are far beyond their associations with traditional centralized groups.

As I wrap up this series, I want to caution that in considering a digital assets de minimis exemption, this forces us to focus on many of the key issues that need to be addressed when crafting U.S. crypto tax policy.

“Could a de minimis tax exemption be made available to taxpayers for personal use crypto purchases?” This seems like it should be a relatively simple question. But it’s not an easy question to answer. This de minimis question is complex and how we choose to answer it has many implications, both seen and unseen. One person’s “trivial” purchase of a cup of coffee, becomes a nontrivial concern when considered in the aggregate across billions of tiny and infinitely divisible digital transactions.

Digital assets can be divided into smaller and smaller pieces, but real world assets cannot be divided in this way. At the same time, the crypto infrastructure is still being developed.

Based on the Senate Committee on Finance hearing on the taxation of digital assets held last October; my testimony as a witness before that committee; and the many communications I have had with market observers, participants, and governmental officials after that hearing, some conclusions have become clear to me.

Properly reasoned and carefully written frameworks for crypto taxation are critical next steps. Any de minimis exemption for digital assets would need to meet the definition of “de minimis.” As I have tried to make clear, current de minimis proposals do not necessarily meet the de minimis definition.

Crypto regulation and taxation in the United States must set the global gold standard for equal access and fair treatment. I am not exaggerating when I say that the course of U.S. commercial viability for the rest of this century might depend on how we handle the regulation and taxation of digital assets.

Is crypto a tempest in a teapot? Or is crypto about to upend finance as we know it? I asked this question in Part I of this series. At this point in time, I believe that crypto could upend finance as we know it. In fact, we are looking at something that could turn into a perfect storm.

[1] “Crypto” has become a generic term that is interchangeable with “Digital Assets” in popular vernacular. “Cryptocurrencies” are one category among many classes of digital assets. Digital assets include cryptocurrencies like Bitcoin, stablecoins, security tokens, utility tokens, non-fungible tokens, real world asset tokens and crypto derivatives / digital asset-based derivatives.

[2] Why Latin Terms Persist in American Law and What They Mean, Bridge Legal (Aug. 9, 2025), available at https://legalclarity.org/why-does-american-law-have-so-many-latin-terms/.

[3] Wex legal dictionary and legal encyclopedia, the Legal Information Institute of Cornell University; available at https://www.law.cornell.edu/wex.

[4] Legal Dictionary, De Minimis (last updated Jun. 3, 2017), available at https://legaldictionary.net/de-minimis/.

[5] See Douglas Troester v. Starbucks Corporation, S234969, Supreme Court of California (May 1, 2018) for general de minimis principles.

[6] S. 2207, 119th Cong. (2025). Lummis Unveils Digital Asset Tax Legislation, lummis.senate.gov (Jul. 3, 2025).

[7] The Digital Asset PARITY Act Discussion Draft (Dec. 20, 2025), available at https://horsford.house.gov/sites/evo-subsites/horsford.house.gov/files/evo-media-document/miller-horsford_digital-asset-tax-bill-discussion-draft.pdf.

[8] S. 2207, 119th Cong. (2025); also see generally Lummis unveils Digital Asset Tax Legislation, lummis.senate.gov, (Jul. 3, 2025).

[9] S. 2207, 119th Cong. (2025); also see generally Lummis unveils Digital Asset Tax Legislation, lummis.senate.gov, (Jul. 3, 2025).

[10] The Digital Asset PARITY Act Discussion Draft (Dec. 20, 2025), available at https://horsford.house.gov/sites/evo-subsites/horsford.house.gov/files/evo-media-document/miller-horsford_digital-asset-tax-bill-discussion-draft.pdf

[11] 12 U.S. Code § 5901(22), Publ. Law 119-27 Guiding and Establishing National Innovation for U.S. Stablecoins Act’ or the “GENIUS Act,” (Jul. 18, 2025), available at https://www.congress.gov/119/plaws/publ27/PLAW-119publ27.pdf.

[12] Unless otherwise indicated, section references are to the Internal Revenue Code of 1986, as amended (the “Code”) or the applicable regulations promulgated pursuant to the Code (the “Regulations”).

[13] Other than certain travel expenses. Code § 162(a)(2).

[14] Other than expenses incurred in connection with taxes. Code § 212(3).

[15] Fumiko Hayashi and Aditi Routh, U.S. Consumers’ Use of Cryptocurrency for Payments, Federal Reserve Bank of Kansas City (Sept. 24, 2025).

[16] Treas. Reg. § 1.6045-1(d)(10).

[17] Global Forum on transparency and Exchange of Information for Tax Purposes, Jurisdictions committed to implement the Crypto-Asset Reporting Framework (CARF) in time to commence exchanges in 2027, 2028 or 2029 as part of the Global Forum’s CARF commitment process (last updated, Dec. 4, 2025), available at https://www.oecd.org/content/dam/oecd/en/networks/global-forum-tax-transparency/commitments-carf.pdf. At the time of a prior update from OECD and as referenced in Part II of this series, the United States had previously committed to implement CARF in 2028.