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13 May 2021

Biden’s capital gains tax plan to pull crypto down to earth from the moon?

Biden’s capital gains tax plan to pull crypto down to earth from the moon?


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Biden’s capital gains tax plan to pull crypto down to earth from the moon?

There are often multiple causes for an asset’s sharp decline, but Bitcoin’s (BTC) 10% “nosedive,” which took place on April 22, may be blamed on the Biden Administration’s reported plan to tax capital gains at double the current rate on America’s wealthiest. .

Bitcoin is habitually volatile, so one probably shouldn’t read too much into a double-digit swoon in any given week, but this might be as good a place as any to reflect upon the possible impact of the United States capital gains taxes, and taxes in general, upon the future growth of cryptocurrencies and blockchain technology?

There were also reports, generally thought to be false, that Treasury Secretary Janet Yellen was spearheading an effort to impose an 80% capital gains tax rate on cryptocurrencies, “as well as rumors that the U.S.

“The [Biden] proposal would put the effective tax rate at above 50% in certain states and would be detrimental to job creation,” Carlos Betancourt, co-founder of BKCoin Capital in Miami, told Newsweek, adding, “and would continue to accelerate the move from states like California and New York to more tax-friendly states like Florida and Texas that have no state income tax.”.

This is still an early stage in a new administration, of course, and there is some question whether a doubling of the capital gains on the wealthiest to 39.6% — as proposed — will even make it through Congress intact, or if that rate will eventually be reduced?

But casting rumors aside, if a doubling of the capital gains tax does pass through Congress intact, would it necessarily mean stormy weather for cryptocurrencies and blockchain technology.

Nathan Goldman, assistant professor of accounting at North Carolina State University, told Cointelegraph — after consulting with his co-author on BTC taxation matters, Christina Lewellen — that the new capital gains taxes are geared to the wealthiest — those with more than $1 million in annual income — and they would be paid only upon the sale of the digital asset:.

With regard to the capital gains issue in general, Menzner commented: “To the extent that higher taxes make it more expensive to use cryptocurrency or adopt it for new uses, it will be a setback.” However, he added: “It could also accelerate the use of stablecoins for certain cryptocurrency projects, as they are designed to minimize price fluctuations and thus minimize any gain or loss from a tax perspective.”.

What does seem clear is the lack of clarity with regard to taxes and cryptocurrencies, starting with the common misperception that you do not need to pay taxes on crypto

As Beecy told Cointelegraph: “When digital currency is held [in the U.S.] by individual retail investors as a capital asset, the tax rules on buying and selling it are reasonably understood, and the capital gains tax that applies ought to impact digital currency transactions in a manner very similar to other financial capital assets.”

Taxation, of course, is a serious business, and even if doubling of the capital gains tax only directly impacts the wealthiest, history teaches that taxes can have a leveraged impact on long-term growth — so, one needs to pay attention

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