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Highlights
- Experts claims zero tax benefits may not be possible for US based crypto currently.
- The zero income tax on crypto presents significant practical, legal, and economic challenges, especially government revenue.
- Dennis Porter suggetss taking meaningful steps forward to reduce tax obligations such as de minimis exemption.
The crypto community is amazed by the reports of zero capital gains tax on U.S.-based crypto projects. The move comes amid Donald Trump’s decision to make crypto a national priority regarding crypto policy and regulations, starting with signing an executive order to develop the national digital asset stockpile. However, experts claim cryptocurrencies and crypto projects developed in the United States may not see zero tax benefits.
Why Is Zero Capital Gains Tax on Crypto May Not Be Possible
Dennis Porter, CEO and co-founder of Satoshi Action Fund, in an X post on January 26 said removing capital gains on crypto entirely depends on US Congress. He asserts it is highly unlikely that the US Congress will include such a proposal in a tax bill in the near term.
He added that the primary obstacle is the significant loss in government tax revenue, making the proposal look difficult to approve currently. The primary agenda for the Trump administration is tax cuts and any policy that threatens those cuts will be sidelined.
The zero income tax on crypto presents significant practical, legal, and economic challenges. The Trump administration will review the anticipated reduction in tax on US-based crypto but not vice-versa, which could be detrimental to equities, bonds, and other financial instruments.
Eric Peterson, policy director at Satoshi Action Fund, said:
Capital gain taxes on crypto is not going to 0% folks. Congress makes tax policy, not the president. Work towards attainable goals like the de minimis exemption.
Recently, John Deaton discussed the ambiguity surrounding U.S.-based cryptocurrency projects. He questioned whether projects with operations or foundations abroad, such as Solana and Tezos, would meet the requirements for tax exemptions.
The Crypto Industry Must Lobby for Meaningful Steps Forward
Dennis Porter believes the crypto industry can take meaningful steps forward to reduce tax obligations. He suggests securing a de minimis exemption of $200 for Bitcoin and other digital asset transactions.
“This proposal aligns with the existing $200 exemption for foreign currency transactions. It’s a far more attainable and reasonable goal, with minimal impact on Trump’s ability to renew his tax cuts,” he added.
Americans who live off of Bitcoin and digital assets should not have to report every small transaction, such as buying coffee, meals, or groceries, for tax purposes. This is an overly burdensome task and it’s time we pursue this simplification of the tax code.
Porter reveals that the U.S. Congress has bipartisan support for this idea and it could become a reality with de minimis exemption. In order to be successful, it must be tied to inflation and bipartisan support that balances innovation and fairness.
Crypto Market Bullish on Zero Crypto Gains Tax Proposal
The crypto market participants are bullish on the US-based crypto and likely zero tax on these crypto as the Trump administration introduces pro-crypto policy and regulations.
Eric Trump confirmed advocating for zero capital gains tax for the U.S.-based crypto projects. ‘Made In USA’ crypto such as XRP, Solana (SOL), Hedera (HBAR) and others will benefit from tax cuts. As per CoinGecko, the US-based crypto market cap is over $560 billion.
Meanwhile, Eric Trump hinted at a 30% capital gains tax on non-US crypto projects. As per experts, this sharp divide is designed to attract global crypto investments to the United States.
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