The Federal Reserve Bank of Minneapolis is one of the 12 federal reserve banks in the United States. They recently published a research paper in which they pointed out that the government should tax digital assets such as Bitcoin or directly Prohibited to maintain government fiscal deficits.​

Will taxing or banning Bitcoin improve fiscal deficits? The Federal Reserve Bank uses mathematical models to demonstrate

The report pointed out that the total accumulated national debt of the United States has reached an astonishing US$35.7 trillion, and the difference between annual expenditure and tax revenue is approximately US$1.8 trillion. In this regard, the Minneapolis Federal Reserve stated in a work report released on October 17: “In an economy where the government attempts to maintain permanent deficits through nominal debt, the existence of Bitcoin has a negative impact on policy implementation. problem."

"Banning Bitcoin by law is the only way to restore the permanent primary deficit, and taxing it would have the same effect." The Federal Reserve Bank used mathematical models to propose a plan to tax Bitcoin. The primary deficit is when government spending exceeds taxes and other revenue, excluding interest payments on the debt.

Source: Federal Reserve Bank of Minneapolis. With reference to the heavy taxes imposed by Italy and Japan, will taxing Bitcoin benefit micro-strategies?

Matthew Sigel, director of digital asset research at VanEck, tweeted that the Federal Reserve Bank has joined the European Central Bank in attacking Bitcoin, adding: “They are just fantasizing about banning Bitcoin by law or imposing additional taxes on Bitcoin. Ensure that U.S. Treasuries remain a risk-free safe asset.”

The ECB’s attack on Bitcoin mentioned by Matthew Sigel here is actually the failure of Bitcoin to become a global payment method as we mentioned before, but instead became an investment asset. After failing to create productivity, Bitcoin is a big pvp, zero-sum game. In response, Jürgen Schaaf, senior management adviser to the European Central Bank, launched a series of verbal attacks on Bitcoin on Twitter.

Jürgen Schaaf said: “Non-holders should realize that the rise of Bitcoin is driven by the redistribution of wealth at the expense of their assets.” And believes that there are already compelling reasons to advocate policies to eliminate Bitcoin. "

(ECB experts criticize Bitcoin: prosperity for early investors, poverty for latecomers)

But interestingly, Messari founder Dan McArdle dug up papers made public by the Federal Reserve Bank in 1996. The paper defines currency as an object that does not enter production and has a fixed supply. He used this to point out that Bitcoin is actually a currency that meets the definition of the Federal Reserve Bank at that time, because as the European Central Bank said, it does not create much production value and the supply is fixed.

In addition, we have mentioned that the profit tax on currency purchases in Japan is as high as 45%, while the maximum profit tax on stock purchases is only 20%. Such an exaggerated gap makes companies like Metaplanet that hold Bitcoin popular.

(Why is Japan’s crypto tax regime good for Metaplanet stock price?)

Italy has also raised the Bitcoin capital gains tax to 42%. In an environment where many countries have set digital asset-related taxes above 40%, more companies like Metaplanet may be spawned. Returning to the United States, if it chooses to impose heavy taxes on Bitcoin in the end, it does not ban it directly. There is an opportunity to push up micro-strategy stocks again under the comparison of the tax system.

(Italy raised the Bitcoin capital gains tax to 42% and eliminated the minimum revenue threshold for the digital services tax)

This article Federal Reserve Bank: Taxing Bitcoin can save the fiscal deficit, but will heavy taxation benefit micro-strategies? First appeared in Chain News ABMedia.