Krypto Seminar: Bitcoin and Etherum - for Christmas on new record heights?
of the bitcoin and ethereum electrify the world. Ethereum beats back with a new record high, the Bitcoin course prepares for a strong November. Will this high flight stop? In the online seminar today at 6 pm the experts of fine gold research give you an exclusive view of the remaining weeks on the crypto market. © Provided by Finanzen.net Andrew Burton / Getty Images In recent weeks, there was a lot to report on the never boring market of crypto feeds.
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As the U.S. government seeks ways to fund its swelling debt and deficits and seemingly ever increasing spending, a puzzling anomaly exists. Investors have flocked to bitcoin and other cryptocurrencies yet receive a preferred tax rate on long-term profits as compared to gold bullion. This makes no sense if, as its advocates like to say, bitcoin is "digital gold."
In 2019, the Internal Revenue Service (IRS) published Notice 2014-21, which characterizes cryptocurrencies as "property" for tax purposes. Meanwhile, gold bullion and equivalent exchange traded funds (ETFs) are treated as "collectibles," like coins, gems, jewelry, art, stamps, toys, comic books, sports cards, etc.
With fewer young parishioners carrying cash, more churches accept bitcoin in their offerings plates
Digital currency became mainstream during the pandemic. Now it's changing the ways Americans make offerings at church.They are told from the pulpit to give first, save second and live off the rest of their incomes.
Assets are generally not taxable until the point of sale, when an investor "realizes" a gain or loss. If either bitcoin or gold is bought and sold within a window of 12 months, the proceeds are taxed as ordinary income at a maximum of 28 percent.
But if bitcoin is held for more than 12 months, any gains from a sale are taxed at the preferred long-term capital gains rate, up to a maximum of 20 percent. Gold bullion held for more than 12 months, however, is still taxed up to a maximum of 28 percent.
The revenue implications of this tax preference for bitcoin are significant if not enormous. If the IRS treated bitcoin like gold, additional billions in tax revenue would result. The value of cryptocurrencies globally has mushroomed from nothing to more than $3 trillion in a decade. A portion of these massive gains by U.S. investors would be subject to some form of higher taxation.
The US needs a worker-centric digital trade agenda
The transformation to a digital economy has been especially rapid for small- and medium-sized businesses.The Biden administration has pledged that new trade policies and agreements must be worker-centric. This term includes more robust labor protections but is part of a larger initiative to develop trade policies that allow the balance of benefits to accrue more to workers and less to large corporations. New digital trade policies can be crafted to fit into this framework, addressing the needs of workers and small businesses in the digital economy.
Investors' appetite for bitcoin and gold is likely to grow as inflation heats up and prices rise. As increasing demand for bitcoin drives its value higher, the tax revenue implications of treating it differently than gold will also increase.
What is the rationale for the IRS favoring bitcoin?
If gold and bitcoin are, in effect, alternative currencies, then our current tax policy is irrational. It makes no more sense than a policy that taxes profits from trading euros more lightly than profits from trading yen.
For better or worse, the tax code is a bludgeon that the government uses to influence behavior. Usually, favorable tax treatment exists if the government deems something to be a public good and wants to favor it. For example, tax policy favors home ownership by having the home mortgage interest deduction.
Yet no sound reason exists for public policy through taxation to favor investment in bitcoin and cryptocurrencies, which tend to be speculative, over gold, which is a time-tested measure and storehouse of value.
Bitcoin falls as China takes aim once again at 'extremely harmful' crypto mining
Chinese authorities are ramping up a crackdown on crypto mining, calling it an "extremely harmful" practice that threatens to jeopardize the country's efforts to reduce carbon emissions. © STR/AFP/Getty Images This photo taken on April 1, 2021 shows a worker adjusting cryptocurrency mining rigs at a cryptocurrency farm in Dujiangyan in China's southwestern Sichuan province. The National Development and Reform Commission spokesperson Meng Wei blasted bitcoin mining during a press conference Tuesday in Beijing. She said that activity "consumes lots of energy" and "produces lots of carbon emissions.
The rationale for taxing gold and collectibles at a higher rate than capital gains in property like bitcoin is "that collectibles were mostly owned by the wealthy and that gains from those collectibles neither motivated innovation nor stimulated economic growth." This rationale no longer makes sense, if it ever did. Regardless, this reasoning would apply equally to bitcoin.
The wealthy use bitcoin and other cryptocurrencies as storehouses of value just as they do gold
Billionaires such as Elon Musk and Mark Cuban openly espouse their holdings in cryptocurrencies. They are just some of those who have gone public with their support. Ten individuals hold roughly 6 percent of the entirety of bitcoin. These are known as "whales."
So bitcoin and cryptocurrencies are storehouses of wealth for the rich, in a similar manner as gold.
Bitcoin and other cryptocurrencies are no more productive than gold
While technologically innovative, it is unclear whether bitcoin stimulates economic growth compared to other productive uses. In contrast, the (physical) mining industry as a whole, exclusive of oil and gas workers, employs 182,900 in the United States. These are real jobs with real economic benefits for society.
Eric Adams, boosting Bitcoin, calls for NYC crypto committee
In positioning himself as a central cheerleader for crypto, Adams has earned praise from tech innovators, but also opened himself up to criticism from environmental activists and leading economists. Bitcoin, the world’s first cryptocurrency, has been linked to illicit activities and condemned as part of a monetary Wild West that creates headaches for governments and regulators. The creation of Bitcoin requires huge amounts of electricity, alarming environmentalists. And some economists believe Bitcoin’s surging stock will ultimately crash.
By one account, 4 percent of Americans have quit their jobs due to gains in cryptocurrencies. Good for them, but is this what we really want as a society?
Measuring the productive impact of bitcoin and other cryptocurrencies is less clear since they are "mined," or digitally uncovered, by individuals. Of the 21 million bitcoins that exist, 18.7 million, or 89 percent, have already been mined, so even if there is an economic boost from bitcoin mining, it is in theory very temporal.
Tax policy should disfavor bitcoin and deflate the bubble before it bursts
Instead, tax policy should disfavor bitcoin and other cryptocurrencies rather than favor them.
Gold is easier to monitor, tax and regulate, relatively speaking. It cannot go through a metal detector without detection or entirely avoid the possibility of a random bag or cargo inspection.
Bitcoin and other cryptocurrencies, which can be stored on a thumb drive, are more shadowy and elusive, and can be used to evade creditors and to enable criminal enterprises, such as those involved in sex trafficking and money laundering. While privacy advocates may laud this, it comes at a great cost.
Further, the multi-trillion-dollar cryptocurrency market is increasingly a systemic risk to the global economy. The larger it becomes, the more levered the rest of the global economy becomes to it. A sudden drop mirroring the meteoric rise of bitcoin would bring other assets down with it, including housing and the stock market, as crypto investors are forced to sell their non-crypto holdings to cover their losses.
Financial Expert to Fomo Investors: How much budget you really plan for Bitcoin investments should
of the crypto market developed 2021 extremely positive. In addition, the fear of many investors contributed to miss the trending train of the trendinvestment. An expert advises, however, to take your own finances in front of a bitcoin investment. © Provil by Finanzen.net Ralph Orlowski / Getty Images • Fomo has driven Bitcoin & Co.
Cryptocurrency mining's energy and environmental impacts are also widespread. Digital "mining" is extremely energy intensive to the point of straining power grids, and therefore a source of environmental concern. Crypto mining operations, by one estimate, consume more energy than the entire country of Argentina. Tax policy should disfavor this.
Fixing the tax anomaly
Taxes on cryptocurrencies should be on par with gold and collectibles. Congress could accomplish this through legislation, or the IRS could simply issue a revised notice and ruling concerning the tax treatment of bitcoin and other cryptocurrencies.
As the old saying goes, "If you want to be treated like a lady, act like one." In tax terms, this could be translated as: If bitcoin and other cryptocurrencies are to be valued as "digital gold," they ought to be taxed like they are really gold.
Chad Bayse is an attorney and Navy judge advocate. He was a counselor to Attorney General Jeff Sessions and attorney-advisor at the National Security Agency. He holds stock positions in Barrick Gold (GOLD), Kinross Gold (KGC) and Sibanye Stillwater (SBSW). He holds no bitcoin or other cryptocurrencies. The views expressed in this article are his own and not those of the Department of the Defense or the Navy.
What will be the Long-Term Crypto Investment?.
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Digital money is not managed by central systems such as governments.
Instead, it is built on blockchain technology, and one such example is Bitcoin.
As digital currency becomes more popular on Wall Street, more possibilities will be accessible.