- Even before his inauguration, observers were optimistic about crypto regulation under President Joe Biden.
- The new president recently appointed blockchain scholar Gary Gensler as the head of the Securities and Exchange Commission (SEC).
- Could we have been wrong all along? Did tax concerns contribute to the major Bitcoin dip?
- A popular crypto trader has referred to the president as “a big negative factor for Bitcoin.”
Since Joe Biden was announced as the president of the United States, many commentators have been optimistic about the growth of cryptocurrencies. In February, the president of Fidelity Digital Assets expressed his predominantly positive views on the future of crypto regulation under President Biden’s administration.
So far, we have seen some positive appointments by Biden from the crypto perspective, including his recent selection of blockchain scholar Gary Gensler as the head of the Securities and Exchange Commission (SEC). But could things change the reign of the 46th president of the United States goes on?
Crypto Growth Under Biden? Or So We Thought
Just months into his term, there were signs that President Biden’s administration could drive the crypto market much higher. The approval and disbursal of huge stimulus packages by the president were thought to affect the markets positively. However, things may be changing.
The president is set to impose new capital gains taxes that could significantly affect the wealthy. While the new taxes are not yet law, there are chances that there could be some big changes as early as 2022.
Individuals whose income exceeds $1 million may want to pay extra attention. The new proposed tax rates could go as high as 43.4%. Already, the news seems to have taken a toll on the crypto market, with Bitcoin tumbling to new monthly lows.
While many envision positive crypto regulations under President Biden, popular financial markets trader Peter Brandt has a different view. Speculating on the administration’s potential effects on the crypto market, Brandt stated that:
Going forward, the Biden presidency may become a big negative factor for Bitcoin. Large BTC supply will come to market to get in front of capital gains taxes which will exceed 55% in some U.S. states.
Brandt, who refers to himself as the “Bitcoin bull libertarian,” further noted that his current views shouldn’t be taken to represent a long-term bearish outlook on Bitcoin. But even though the new taxes are not yet confirmed, the news seems to have taken a toll on the crypto market.
On the Flipside
- The Biden administration is reportedly developing a regulatory framework for the crypto industry.
- According to reports, the chairman of the U.S. SEC, Gary Gensler, is waiting for direction from the Treasury.
- There is a possibility that the regulatory framework could bring much-needed clarity to the crypto industry.
Did Fears Of Tax Add To The Crypto Dip?
Following the Xinjian incident, Bitcoin has been on a steady decline, which apparently was made worse by the details of the proposed tax rates. Following the news, Bitcoin dropped to a new monthly low of $47,159.49 on Sunday, April 25.
According to a report, the new taxes, which represent almost double the current amount, will help pay for social spending to address long-standing inequality. Crypto investors are particularly fearful because of new tax policies from the Internal Revenue Service (IRS).
The IRS now treats cryptos more like properties than currencies. Therefore, if investors hold any crypto for more than a year before selling, they will face capital gains tax – which could rise as high as 43.4%. However, Michael Hewson, chief market analyst at CMC Markets, has stated that the likelihood of that becoming law is between slim and none.