This is such a bold and creative idea!
The United States will establish a Bitcoin tax-free zone to promote the development of the digital economy
On August 8, according to Cointelegraph, the United States is brewing a new proposal to make the United States a global leader in the digital economy by establishing a Bitcoin tax-free digital economic zone (DEZ). The proposal is led by the newly established USABTC policy group and advocates a tax-free DEZ, in which Bitcoin can be traded and accumulated without paying capital gains tax, but tax is paid when redeemed. According to USABTC, the initiative can ensure the financial future of the United States by fostering a "resilient and innovative" economic environment, leveraging the potential of Bitcoin while maintaining the core position of the US dollar.
USABTC said that it is neither feasible nor politically tenable for the government to purchase Bitcoin directly. Therefore, it advocates the creation of a tax-free digital economic zone where Bitcoin transactions can be carried out tax-free while incorporating a taxed redemption process to ensure income generation. Providing tax-free capital gains within the zone can attract investors and promote wealth growth in a regulated environment. Imposing an exit tax on the exchange of Bitcoin back to traditional currency can provide a new source of revenue for the government, which is beneficial to both federal and state finances. As part of the plan, USABTC envisions creating a pegged Bitcoin system on Layer2 solutions to ensure efficient and secure transactions.
The proposal also outlines a phased approach for the United States to implement a tax-free digital economic zone, beginning with an executive order from the President authorizing the use of the Exchange Stabilization Fund (ESF), a tool of the U.S. Treasury originally established by the Gold Reserve Act of 1934. Subsequent phases will involve drafting legal opinions, legislative work, and extensive public outreach to ensure broad understanding and support. The Internal Revenue Service (IRS) will also play a collaborative role in establishing a strong legal framework and approving the proposed tax framework. It also explicitly prevents excessive government intervention by incorporating self-custody rights into the law, an ongoing concern for many in the cryptocurrency community. As currently planned, the implementation phase of the USABTC plan is expected to begin in 2025. If all legislative and regulatory approvals are obtained, the DEZ will be fully operational in 2026.
