Trump will abolish capital gains taxes on American cryptocurrencies

Donald Trump reportedly plans to do just that eliminate the 37% capital gains tax on US-issued cryptocurrencies. This would mean that American investors no longer have to pay taxes on the profits they make with certain cryptocurrencies.

The worst part of this tax system currently is that users also have to pay taxes for using crypto in their daily lives, such as buying clothes or shopping online.

A member of the Trump Transition Team added that this would be the case only apply to companies that registered in the US before the token was issued. However, it is not a problem even if the company is not based in the US because it can still take advantage of this offer by moving to the US.

But even in that case, i.e. if a company moves to the US, only the tokens issued after the move are tax-free.

It is worth noting that during his campaign, Trump had promised to make significant changes to the US crypto market. In his own words, he wants the country to “crypto capital of the world.” And it looks like he will keep his word.

This is also why the crypto market has boomed since Trump’s victory, with Bitcoin reaching all-time highs. Moreover, veteran trader Peter Brandt expects Bitcoin to reach $327,000.

Implications of this policy change

If these tax policies are actually implemented, the consequences for the US will be enormous. It could lead to a significant change in investment strategy as investors will start to prefer domestically issued tokens over foreign assets.

Tax exemption will benefit both companies and investors. Thus, foreign entities may be tempted to move to the US as not many countries offer tax exemptions on digital assets.

In fact, according to reports, it is Italy could plan to increase taxes from 26% to 42% from 2025. This could prompt many Italian crypto companies to move their base to the US, which will in turn strengthen the US crypto market and boost the economy.

Some crypto experts also believe that this move will encourage certain US states to adopt new legislation supporting Strategic Bitcoin Reserve – a stock of digital assets held by the government that can be used in emergency situations.

Such a reserve could give the US an advantage over its rivals protect against economic instability. If this actually happens, the US won’t be the only country to do so, as at least five other countries are also considering imposing a national Bitcoin reserve.

It’s not easy

However, how successful Trump’s attempt to make cryptocurrency tax-free will be remains a big question. After all, cryptocurrencies are currencies at the end of the day and there is no solid argument (other than tax exemption being an incentive for investors) for making it tax-free.

Some fervent opponents even claim that this is so should be taxed more heavily, given its energy-intensive nature.

Let me explain: the costs of creating fiat money are minimal. However, creating new cryptocurrency tokens requires a lot of energy and computing powerwhich has a significant impact on the environment.

In any case, these digital assets should be taxed more heavily to compensate for the damage they cause. Nevertheless, Trump has reinvigorated the cryptocurrency market, but the coming weeks will reveal how serious the new US president is about revolutionizing the US crypto scene.

Krishi is an avid tech journalist and content writer for both B2B and B2C, with a focus on making the software purchasing process easier for businesses and improving their online presence and SEO. Krishi has special skills in writing about technology news, creating educational content on CRM (Customer Relationship Management) software, and recommending project management tools that can help small businesses increase sales. Besides his writing and blogging work, Krishi’s other hobbies include studying the financial markets and cricket.

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