Bitcoin could become a way to pay federal taxes under a new House proposal, and the coins collected would be saved in a long-term U.S. reserve. The "Bitcoin For America Act," introduced by Rep. Warren Davidson (R-Ohio), outlines how taxpayers could send Bitcoin (BTC) to the government and how those funds would be managed over decades.
What the bill would do
The bill would allow federal tax payments in Bitcoin. The amount owed would be calculated using BTC7s dollar value at the moment of transfer. Because the payment itself settles the tax, filers would not incur capital gains taxes on that BTC. (Capital gains are taxes on the profit you make when an asset7s price rises.)
All coins received would flow into a Strategic Bitcoin Reserve. The plan sets a hard limit: no more than 5% of the reserve could be sold in any year, and most holdings would be locked away for at least 20 years. The goal is to build a long-term asset base, not to flip coins for short-term cash.
How it would work behind the scenes
The Treasury Secretary could partner with regulated banks to accept, store, convert, and send Bitcoin. The reserve would rely on standard crypto security practices like cold storage (keeping keys offline) and multi-signature wallets (several approvals needed to move funds).
Why it matters
Supporters say this could modernize U.S. financial policy and position the country as a leader in digital assets, aligning with the current administration7s pledge to make the U.S. the "crypto capital of the world." The bill argues other nations are accumulating Bitcoin, and the U.S. should not fall behind in building strategic holdings.
Context: U.S. holdings and recent moves
Earlier this year, President Donald Trump created a separate U.S. Strategic Bitcoin Reserve by executive order to hold BTC seized in criminal and civil cases rather than auctioning it. The government currently holds 198,012 BTC, worth about $17 billion at recent prices.
Bitcoin remains the largest cryptocurrency with a market value above $1.75 trillion. BTC recently traded near $87,887, down about 2% on the day.
What this could mean for taxpayers
- Choice: Paying in BTC would be optional, adding a new way to settle federal taxes.
- Clear reporting: Taxes would be based on BTC7s price at the time you send it, reducing confusion from price swings.
- No extra tax on the payment: Using BTC to pay would not trigger capital gains on the coins used.
Support from policy groups
In a press release, the Bitcoin Policy Institute backed the legislation and shared a model suggesting that tax-paid BTC could steadily build a national reserve over time. The group called it a market-driven, democratic approach to assembling a government-held Bitcoin asset.
How this differs from past efforts
Some U.S. states have tested crypto tax payments. Ohio briefly let businesses pay certain taxes in crypto before ending the program. Colorado allows residents to pay state taxes with crypto through a payments partner. Davidson7s bill would bring a version of that concept to the federal level and layer on a strategic reserve policy.
Risks and open questions
- Volatility: Holding BTC for decades could boost the balance sheet in bull markets, but it also exposes the government to drawdowns.
- Operations: Treasury and banks would need robust custody, accounting, and reporting processes built for Bitcoin.
- Market impact: A 5% annual cap on sales aims to limit pressure on BTC markets, but large government moves would still be closely watched.
- Path to passage: The proposal must clear the House and Senate and be signed by the President before any changes take effect.
The bigger picture
If passed, the U.S. would shift from selling most government-controlled Bitcoin to gradually building a strategic stash—more like how countries stockpile gold. For everyday investors, tax payment optionality could make BTC feel more useful. For policymakers, the reserve would test whether a digital asset can serve as a long-term national holding.