President Trump to Remove Capital Gains Tax from Certain US Cryptocurrencies

Key Takeaways

• A new report suggests that Trump might remove capital gains taxes on US-issued crypto tokens.
• This would mean that investors will no longer have to pay taxes on the profit they make from trading in crypto.
• However, this offer is only applicable to companies registered in the US. If non-US companies want to benefit from it, they should relocate to the US.

Donald Trump is reportedly planning to eliminate the 37% capital gains taxes on U.S.-issued cryptocurrencies. This would mean that US investors will no longer have to pay any taxes on the profit they make from certain cryptocurrencies.

Currently, the worst part about this tax scheme is that users also have to pay a tax for using crypto in their daily life, such as for buying clothes or shopping online.

A Trump Transition Team member added that this would only apply to companies that registered in the US before the token was issued. However, it's not a problem even if the company is a non-US one, as it can still manage to benefit from this offer by relocating to the US.

However, even in that case, i.e., if a company relocates to the US, only those tokens that have been issued after the relocation will be tax-free.

It's worth noting that while campaigning, Trump had promised to make considerable changes in the crypto market of the US. In his own words, he wants the country to become the crypto capital of the world." And it looks like he's going to keep his word.

This is also why the crypto market is booming since Trump's victory, with Bitcoin reaching all time highs. What's more, veteran trader Peter Brandt foresees Bitcoin hitting $327K.

Implications of This Policy Change

If this tax policy is actually implemented, the outcome will be huge for the US. 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 the companies as much as it will benefit the investors, so foreign entities might be tempted to move to the US because not many countries offer tax exemption on digital assets.

In fact, as per reports, Italy might be planning to increase taxation from 26% to 42% from 2025. This might push a lot of Italian crypto firms to move their base to the US, which in turn will strengthen the US's crypto market and boost its economy.

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

Such a reserve can give the US an advantage over its rivals and protect it from economic instability. If this really does happen, the US won't be the only country to do that, seeing as at least 5 other countries are also contemplating imposing a national Bitcoin reserve.

It's Not Easy

How successful Trump's attempt at making cryptocurrency tax-free will be remains a huge question, though. After all, at the end of the day, cryptocurrencies are also currencies and there's no solid argument (apart from tax exemption being an incentive for investors) for making it tax-free.

In fact, some staunch opposers argue that it should be taxed more heavily considering how energy-intensive it is.

Let me explain: the cost of creating fiat currency is minimal. However, creating new cryptocurrency tokens requires a lot of energy and computing power, which has a significant impact on the environment.

So, if anything, these digital assets should be taxed more to make up for the damages they cause. Nevertheless, Trump has breathed new life into the crypto currency market, but the coming weeks will reveal just how serious the new US President is about revolutionizing the US crypto scene.

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