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Biden ‘Tax Plans’ Speculations Spook Crypto Speculators

Bitcoin (BTC) and altcoin markets are in red today, with with BTC dropping below the key USD 50,000 mark – in the wake of fresh tax-related speculations from the United States.

The American President Joe Biden is reportedly set to unveil plans to enact sweeping new tax regulations, including changes to capital gains tax – which might affect thousands of crypto traders in the country also.

The plans will reportedly see the state almost double the rate of taxes on capital gains to 39.6% for those earning over USD 1m.

Some, though, are sensing an opportunity for bargain coin buying, while other pundits think the plan may never see the light of day due to pushback from the House.

Regardless, capital gains tax concerns were already pressing for American crypto enthusiasts, who already had to deal with selling-related dilemmas: Investors often have to pay capital gains tax on tokens they sell for fiat after holding for over a year.

However, BTC’s remarkable performance could end up hitting investors in the pocket, as they’re now sitting on massive gains. In a year, BTC is up by 579%, ethereum (ETH) – 1,092%, while many altcoins recorded much higher gains.

“President Biden could be doing crypto — and especially crypto lending businesses like ours — a favor should his proposal to raise taxes for wealthy investors to over 40% go through. It would make even greater sense to play that oldest trick in the manage-your-finances-smart book: borrow against your assets to avoid capital gains taxes,” Antoni Trenchev, Co-founder and Managing Partner of Nexo, a financial institution for digital assets with over USD 12bn in assets under management, said in an emailed comment, adding that BTC is collateral that appreciates in value.

“In fact, Biden would be doing us so great a favor, regardless of the short-term spook, that I wonder whether this proposal may not be a strategic prelude to pro-crypto legislation in the US,” he added.

Meanwhile, Reuters reported that the news had left BTC, ETH and more “on the ropes,” and would “curb investment in digital assets.”

The news agency quoted Chris Weston, the head of research at Pepperstone Markets, as stating that “ether has been the poster child of movement. It has massively outperformed bitcoin.” However, Weston added that “technical selling” may have been “going through” in the markets – a suggestion that some shred reading, rather than a mass exodus may be underway.

However, Bloomberg quoted Matt Maley, the chief market strategist at Miller Tabak + Co, as stating,

Some crypto traders, such as CoinMamba, pointed to a somewhat muted stock market reaction, claiming that this could be evidence that Biden’s plan could be met with opposition from lawmakers, writing,

“We work hard, get taxed a large percentage on income, then we are forced to invest because fiat money inflates. Then we’d get taxed ~50% additional on capital gains. In the meantime central banks just print money. Sounds like a scam!”

Some saw it as an opportunity for portfolio growth (and puns), calling on investors to “Biden the dip.”

And as rumors of an “80% crypto tax” started to do the rounds on social media,” some (albeit jokingly) suggested that such “FUD” could have disastrous consequences on the markets.

@NeerajKA https://t.co/GuHIOStpo9

— Gene Rosamilia (@Rosewich1)

On Reddit, meanwhile, some suggested that the “dip” was temporary and would not scare off “whales,” with one writing,

“Yes, I know Biden said he wanted 38%, but he’s a puss and also said ‘he’s open to negotiation.’”

Also, there is a solution (for now):

@alistairmilne Until “unrealized gains” law comes into play. It’s coming

— Project $1M (@Bet2amillion)

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Learn more:
– ‘Guys, File Your Crypto Taxes, the IRS is Coming’
– Collect Taxes More Effectively to Avoid ‘Debt Trap’ Chaos, Warns IMF
– Crypto and Tax in 2021: Be Ready to Pay More
– The G7 Taxman Is Coming for Your Crypto Profits
– Idea Of Taxing Unrealized Gains Resurfaces As Money Printing Intensifies
– IRS Updates Instructions To Tax Individual Crypto Investors
– Bitcoin & Crypto Taxes In US: When to Sell and When to Hodl
– Ethereum 2.0 Has Another Mystery – Taxes
– Can’t Beat Crypto Regulators? Educate Them
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(Updated at 10:44 UTC with a comment from Antoni Trenchev.)

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