- High taxes in India and the US have deterred new investments and interest in crypto, stifling innovation in these markets.
- Russia's crypto ban is pushing developers towards black markets, potentially strangling legitimate crypto development.
- China's 2017 crypto ban has led to a tepid ETF market, reflecting the long-term impact on innovation and investment in the sector.
The United States boasts the largest cryptocurrency market in the world, with its ETF market cap surpassing $72 billion as of May 14, 2024, driven by strong demand. Nevertheless, the US government has taken extensive measures to stifle the growth of the domestic crypto economy.
One significant move was New York's two-year ban on crypto mining, enacted despite the fact that much of the energy for crypto mining in the US is sourced from renewable resources. The New York Department of Financial Services implemented this ban, reflecting some of the toughest anti-crypto policies in the nation.
For those unfamiliar, crypto mining, particularly through proof of work, is a critical method for securing blockchain networks against hacks and exploits. This technology has ensured Bitcoin's resilience and security over the years.
In addition to the mining ban, there is a proposal to increase taxes on the electricity supplied to crypto miners by 30%, a move that would render Bitcoin mining economically unsustainable. This tax, introduced by the Biden administration, is referred to as the Digital Asset Mining Energy Tax (DAME).
Looking internationally, India imposed a 30% income tax on crypto earnings starting in April 2022, one of the highest such taxes globally. This law does not allow for offsetting profits with losses, meaning a $100 profit and a $100 loss in crypto transactions still incurs a $30 tax. This has severely impacted the crypto ecosystem in India, particularly harming NFT developers and entrepreneurs, leading to the decline of advanced NFT token standards like ERC 1155 and ERC 6551.
In Russia, the government has almost completely banned cryptocurrency to support the ruble, as reported by Anatoly Aksakov, Chairman of the Committee on Financial Affairs. While crypto mining is still permitted due to its potential to generate foreign exchange, the broader ban has adversely affected developers reliant on cryptocurrencies like Ethereum and Solana. This has also led to the rise of black markets and financial crimes, as many are forced to turn to these illicit avenues to redeem their earnings.
China's crypto ban from 2017 continues to have long-term repercussions. On April 30, 2024, Hong Kong launched its first spot Bitcoin ETF. However, investor confidence was low, influenced by the lingering fear of the 2017 crackdown. The ETFs attracted only $112 million on their first day, starkly contrasting with the $4.6 billion inflow seen by US spot Bitcoin ETFs on January 11, 2024.
Disclaimer: Voice of Crypto aims to provide accurate and current information but is not responsible for any missing facts or inaccuracies. Cryptocurrencies are highly volatile financial assets, so please conduct thorough research and make informed financial decisions.
