A newly formed policy group in the U.S. has proposed a groundbreaking policy to create a Bitcoin tax-free digital economic zone (DEZ).
The USABTC group, composed of financial policy experts and blockchain advocates, is championing this initiative to transform the nation’s approach to digital asset regulation and adoption.
Newly Formed USABTC Policy Group Leads Proposal to Build the Bitcoin DEZ
According to the USABTC group’s vision, the DEZ would serve as a haven for investors and businesses, allowing them to trade Bitcoin without the burden of capital gains taxes.
This innovative strategy aims to position the U.S. as a leader in the rapidly growing cryptocurrency sector, leveraging the “opportunity” that Bitcoin presents to “secure the financial future of America and its citizens,” as stated on the USABTC website.
The USABTC group’s proposal outlines a multi-phased approach to establishing the tax-free Bitcoin DEZ.
Rather than a sudden implementation, the plan calls for a gradual rollout, starting with the U.S. President issuing an executive directive to authorize using the Exchange Stabilization Fund (ESF) for Bitcoin trading and investment.
Subsequent phases would involve legal efforts to classify Bitcoin under the Gold Reserve Act of 1934, paving the way for the creation of the DEZ through legislative action.
This would be accompanied by collaborations with the Internal Revenue Service (IRS) to develop a framework for special tax treatment and tax-free capital gains within the designated economic zone.
Integral to the proposal is the introduction of a proprietary token, dubbed USABTC, which would function as a pegged Bitcoin system.
Powered by a layer 2 blockchain solution, such as Stacks, the USABTC token would facilitate seamless, tax-free transactions within the regulated environment of the DEZ.
To ensure the sustainability of the initiative, the group has proposed an innovative tax redemption policy.
This would involve an “exit tax” on the conversion of acquired Bitcoin into fiat currency, effectively creating a new revenue stream for the government.
Current State of Crypto Taxation in the U.S.
The USABTC group’s proposal for a Bitcoin tax-free DEZ is coming at a critical time when crypto tax in the U.S. is still evolving.
Currently, the IRS treats digital assets as property, subjecting investors to capital gains and losses when engaging in crypto transactions.
Short-term capital gains, derived from cryptocurrencies held for less than a year, are taxed at the regular income tax rates, which range from 10% to 37%, depending on the individual’s taxable income.
On the other hand, long-term capital gains from cryptocurrencies held for over a year are eligible for reduced tax rates of 0%, 15%, or 20%, again based on the taxpayer’s income level.
In May 2024, U.S. President Joe Biden revived the idea of a 30% tax on electricity used by crypto miners in his budget proposal for 2025.
This tax would apply to any firm using computing resources, whether owned or leased, to mine digital assets. The government plans to introduce the tax in three phases, starting at 10% in the first year, then increasing to 20% and 30% in the following years.
According to the Biden administration, the proposed tax would also affect crypto mining firms that generate their electricity and companies that produce or acquire power “off-grid.”
Bitcoin mining infrastructure firm Riot Platforms’ vice president of research, Pierre Rochard, believes this is a ploy to suppress Bitcoin and launch a central bank digital currency (CBDC).
The post US Policy Group Proposes Bitcoin Tax-free Digital Economic Zone appeared first on Cryptonews.
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