There are often several reasons for a sharp decline in an asset, but the 10% drop in Bitcoin (BTC) that occurred on April 22nd may be related to the Biden administration’s reported plan to tax capital gains twice the current interest rate of the richest. The Americans. …
Bitcoin is generally volatile, so it might not be worth reading much about the double-digit weakness each week, but it could be a good place like anything else to think about the potential impact of a capital gains tax in the US. States and taxes in the United States. Collected for the future growth of cryptocurrency and blockchain technology.
Could this interfere with adoption in the long term? If so, how? Can Biden plan be realized in light of the uncertainty in US politics? How does one also explain the mini-market’s explosion in the face of the simple possibility of raising taxes in one country? What misunderstanding can we have about taxing cryptocurrencies in general?
“The drop in prices is likely to be attributed to a number of factors and rumors – mainly due to the expiration of future positions at the end of the month, which resulted in the liquidation of positions, causing the downturn,” said Marcus Fett. Cointelegraph auditing partner, Grant told Cointelegraph. Thornton LLP and Head of Digital Asset Practices for the company.
There were also reports, usually considered false, that Treasury Secretary Janet Yellen led efforts to introduce an 80% tax rate on capital gains for cryptocurrencies, “as well as rumors that the U.S. Treasury is investigating financial institutions over the illegal use of cryptocurrencies.” Wit: “The Treasury will not,” adding: “Then there were comments about the decline in Chinese mining capacity.”
A lot happened that week
David Trainer, CEO of investment research firm New Constructs, played down the volatility of BTC’s price, saying, “10% volatility is not new to BTC and cryptocurrencies in general.” Meanwhile, Tyler Menzer, Accountant and Ph.D. In the Department of Accounting at the University of Iowa, he notes that “even if tax news coincides with the fall, it can only be one of many factors.”
But taxes do mean something. “[Biden’s] proposal would put the effective tax rate higher than 50% in some states and hurt job creation,” Carlos Betancourt, co-founder of BKCoin Capital in Miami, told Newsweek, “adding,” and it will continue to accelerate the transition from states like California and New York, to more states. Suitability for taxes like Florida and Texas, which do not tax state income. ”
Of course, this is still an early stage of the new administration, and there are some questions about doubling the capital gains for the wealthy to 39.6% – as is proposed – that will pass through Congress without change, or that rate will eventually be lowered.
“Someone has to pay for all of the incentives, deficits, and government debt, so it’s very likely that you will see tax increases in the near future – whether they’re related to capital gains or something that’s yet to be determined,” – Mazar Wani. PricewaterhouseCoopers Tax Representative. Partner in San Francisco, Cointelegraph told Cointelegraph.
However, Omri Marian, a professor of law at the University of California, Irvine School of Law, said the proposal was unlikely to be accepted. “The Democratic majority in Congress is too small for that,” Marianne told Cointelegraph. “The numbers proposed at this point are unlikely to pass the Senate in its current form, and the centrist Democrats will not support the blank numbers,” said Chris Weston, head of research at Pepperstone Group, the currency broker.
But regardless of the rumors, if a capital gains tax doubling comes from Congress, does that necessarily mean bad weather for cryptocurrency and blockchain technology?
Probably not. Nathan Goldman, an assistant professor of accounting at North Carolina State University, told Cointelegraph – after consulting her co-author on BTC taxes, Christina Levlin – that the new capital gains taxes are for the very wealthy – those with more than $ 1 million. In income. Annual Income – and will only be paid when selling a digital asset:
“As a result, it is unclear whether the proposed changes will have a significant impact on most cryptocurrency holders.”
But “taxes are likely to affect bitcoin prices,” Menzer continued, “as we have a lot of previous research on a wide range of outcomes and aspects of life that are affected by tax rates, especially in the financial sector. …”
Moreover, they can leverage crypto and blockchain technologies in some interesting directions.