Crypto Tax Proposal in US Has Had Limited Impact on Bitcoin Market


On the face of it, a U.S. bill proposing to raise $28 billion through extra cryptocurrency taxes might unnerve some bitcoin investors. But so far, the market reaction to the bill has been remarkably muted.

Last Wednesday, lawmakers drafting a bipartisan infrastructure bill in Congress proposed to raise $28 billion in extra crypto taxes by applying new information-reporting requirements to exchanges and other providers of crypto services. 

How To Get Free Crypto  

According to a draft of the bill, any broker who transfers any digital assets will need to file a return under a modified information reporting regime. That would enable the Internal Revenue Service to collect taxes already owed on capital gains from sales of digital assets. 

Related: Market Wrap: Bitcoin in Pullback Mode as Regulatory Concerns Rise

Given how digital-asset markets often react fairly quickly to news announcements – the recent rumor that Amazon would accept bitcoin as a form of payment being one example – the bill’s plan for the extra crypto taxes has so far had little impact on bitcoin prices.

Bitcoin, the largest cryptocurrency by market value, climbed in recent weeks as the news of the bill surfaced, though it has slipped in the past few days, changing hands at around $38,000 at press time.

“This isn’t a game changer for the institutional world,” said Edward Moya, a senior analyst at Oanda. “However, the announcement did disrupt a steady flow of bullish macro developments that had bitcoin poised to break out of its recent trading range.”

Coinbase Banner  

Moya predicts that additional crypto taxes might dissuade some retail traders from investing now, but he said the majority of the crypto world will be “unfazed.”

Related: USDT Usage on Ethereum Shifts Away From Asia Daytime Hours

Some crypto experts said the bill might have a positive impact on the market, because it could give digital-asset markets more traction and visibility. Henrik Kugelberg, a crypto over-the-counter trader, views the bill as a positive sign of adoption for the market. 

“Most people are OK with paying taxes on their earnings,” he said. “This makes crypto more commonplace.” 

James Deane, an analyst at Quantum Economics, points to the fact that cryptocurrency is “truly a global phenomenon, and the U.S. is merely one jurisdiction, meaning impact is limited outside of it.”

Deane said that “while some within the U.S. might be discouraged from trading under the new rules, others will find confidence in the clarity, creating a neutral reaction.” 

FreeBitcoin Banner  

He also noted that the limited market impact so far might come down to the bill’s implementation being far off. The measure still needs to be negotiated in Congress and signed by President Joe Biden, and it wouldn’t become fully effective until 2023. Lobbyists for the digital-asset industry are seeking to kill or water down the extra crypto taxes.

John Todaro, vice president of crypto asset and blockchain research at Needham & Co., agrees that the near-term effect on markets from the proposed crypto taxes isn’t worrying because the legislation wouldn’t come into effect for quite some time. 

Todaro is watching whether the bill’s language will change. It could get further adjusted so that it wouldn’t affect “every company in the space, such as miners, which was where the bill started,” he said.

“It was quite broad,” Todaro said. 

Deane said that despite a potential tax increase, the net effect is likely to be a “positive one on the cryptocurrency industry.”

“This move effectively legitimizes these transactions in the eyes of the government and provides a clear and robust framework of rules in which investors can operate without fear of repercussion, as long as those rules are followed,” he said.

Related Stories

  • ‘Cautiously Optimistic’: Crypto Brings Lobbying Muscle to Infrastructure Debate
  • State of Crypto: Infrastructure Bill Shows Congress Sees Crypto as Here to Stay

Go to Source
Author: CoinDesk

Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.