What to know:

Rep. Warren Davidson introduced the Bitcoin for America Act to allow federal tax payments in bitcoin without capital gains liability.
The bill aims to direct BTC tax payments to the proposed U.S. Strategic Bitcoin Reserve.
President Trump's executive order authorized the reserve, but its establishment likely requires further congressional action.

One of the crypto industry's longtime Republican allies in Congress introduced a bill to allow individuals and businesses to pay taxes in bitcoin without triggering capital gains liability and also directing the funds to the U.S. Strategic Bitcoin Reserve — providing a new funding mechanism for the federal crypto stockpile that hasn't yet been established.

Rep. Warren Davidson (R-Ohio) introduced the Bitcoin for America Act to allow Americans to pay federal taxes in bitcoin, he said on his official website on Thursday.

Davidson, a bitcoin advocate since 2012, said the bill is aimed at strengthening the country's economy and positioning it at the forefront of global digital asset leadership.

"The Bitcoin for America Act marks an important step toward modernizing our financial systems and embracing the innovation that millions of Americans already use every day," he said in a statement.

"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 in value over time — unlike the U.S. dollar, which has steadily lost value under inflationary pressures," he stated.

He said in a talk with the Bitcoin Policy Institute, a research organization advocating BTC, that he regrets Congress did not listen to him back in 2016 when BTC was around $500 to $600.

"Think about the upside in terms of what it could do for a country that's $38 trillion in debt," the congressman said.

"The Bitcoin for America Act proves that a strategic Bitcoin reserve doesn't need to be a top-down mandate," said Conner Brown, Head of Strategy at BPI. "By letting Americans voluntarily contribute bitcoin through their tax payments, it creates the first truly democratic, market-driven model for national bitcoin accumulation."

President Donald Trump's Strategic Bitcoin Reserve became a possibility in early March, when he signed an executive order authorizing its creation.