On June 25, Congressman Matt Gaetz (R-Fla.) introduced legislation calling for the IRS to accept federal tax payments in Bitcoin, marking a significant step toward modernizing the US tax system and embracing digital currency.

Gaetz emphasized the potential advantages of this initiative, describing it as a "bold move" aimed at keeping the US at the forefront of technological advancement.

"My legislation will update our tax system by allowing federal income taxes to be paid with Bitcoin," Gaetz stated, highlighting a vision where digital currencies play a crucial role in the financial system.

Under the proposed bill, taxpayers would have the option to use Bitcoin for federal tax payments, a change Gaetz believes will spur innovation, streamline processes, and provide greater flexibility to American citizens.

If passed, the legislation would require Treasury Secretary Janet Yellen to devise a framework for accepting Bitcoin as an official form of currency for tax payments, despite Yellen's previous reservations about cryptocurrencies.

Gaetz cited his recent visit to El Salvador, where Bitcoin was adopted as legal tender in 2021, as influential in shaping his decision to introduce the bill. He pointed to Bitcoin's positive impact on economic stability and job creation in Central America.

The Congressman's proposal reflects a growing acknowledgment of digital currencies' potential to reshape economic practices and integrate them into mainstream financial systems. It follows similar initiatives by several US states; for instance, Colorado approved crypto payments for taxes in 2022, and Louisiana recently passed legislation protecting crypto self-custody and mining rights.

In the broader regulatory landscape, Gaetz's bill arrives amidst ongoing Congressional debates on how to regulate the expanding crypto industry. Recently, the House passed FIT21, a regulatory framework granting either the SEC or CFTC oversight of crypto trading. This bill aims to establish clear guidelines for classifying digital assets as commodities or securities, addressing a significant obstacle to industry growth in the US.

FIT21 garnered strong bipartisan support in the House and anticipates similar backing in the Senate, which has yet to approve the legislation.