Crypto in shaky currency, bitcoin drops 9%. How will the 30% tax proposal affect the US?

Admittedly, there are a lot of drawbacks to the crypto market when this tax proposal is implemented, but that is not all as it is seen as a concerning factor for the country’s economy, as well as due to the industry being a job creator and Sufficient investment source is among .

At the time of writing, on Coinmarketcap, the global crypto market The turnover stood at $931.21 billion, a decline of 6.82% over the previous day. Bitcoin’s overall market dominance decreased by 0.48% to 41.54%.

Bitcoin was performing at $19,828.06 — down 8.84%. While Ether slipped at least 9.5% to the level of $1,396.

Other cryptocurrencies such as Binance’s token BNB are down by over 6%, while XRP is down by 7.3%, Cardano is down by 3.4%, Polygon is down by 7.8% and Dogecoin is down by over 10.4%.

Bitcoin’s weekly performance is currently down around 12% and Ethereum is down over 11%. Polygon and Dogecoin are down more than 14% and 15%, respectively, while BNB and Cardano are down 6% and nearly 9%, respectively, in seven days.

Shiba Inu is the top trending crypto on Friday, however, having slipped almost 8% in 1 day.

On Thursday, a Department of the Treasury supplementary budget explainer paper said that “any firm using computing resources, whether owned by the firm or leased from others, will be subject to an excise tax equal to 30% of the cost of the electricity.” Will be subject to. Used in digital asset mining.”

The paper explained that digital asset mining is a process of recording and transferring cryptographically secure assets on a distributed ledger to validate transactions between holders of digital assets, for example by selecting validators. Using high-powered computers to calculate for.

According to the paper, current law does not provide regulations specifically addressing digital assets, with the exception of some rules related to broker reporting and reporting of cash transactions.

Therefore, the 30% excise tax proposal will be effective for taxable years after December 31, 2023. The excise tax will be phased out over a period of three years—10% in the first year, 20% in the second year and 30% thereafter.

Through this proposal, US President Joe Biden plans to reduce the mining activity as well as the environmental impacts and other damages associated with it.

But the 30% tax rate has some significant implications for both crypto companies and traders.

According to KoinX founder Puneet Agarwal, the proposed 30% tax on cryptocurrency mining electricity use as part of the Biden budget could have a significant impact on the mining and trading of bitcoin and other cryptocurrencies.

If implemented, Aggarwal said, “could lead to decreased mining profitability, potentially slower transaction processing times and increased vulnerability to attacks. This could have negative consequences for the security and stability of cryptocurrency networks.” “

Furthermore, he believes that “the tax could lead to a decline in mining activity and reduce the security of the network and transaction processing speed, potentially leading to lower demand and lower prices for cryptocurrencies.” could.”

Also, Agarwal points out that it is important to consider the potential impact of a tax if it is imposed only in a particular area. They believe that this could lead to a competitive disadvantage for mining operations in that region compared to other countries, potentially resulting in relocation of mining activities to other regions.

Additionally, Agarwal said, “the proposed tax could signal an increased level of regulatory scrutiny and oversight in the industry, which could potentially impact wider adoption and increase the regulatory burden for crypto-related businesses.” Some in the cryptocurrency community have expressed concern about the potential impact of increased regulation on the industry, arguing that it could stifle innovation and hinder the development of decentralized financial systems.

On the other hand, Rajagopal Menon, Vice President, WazirX, believes that the 30% tax rate on cryptocurrency mining firms is a significant development for the crypto industry. They believe the move kills two birds with one stone: regulate the booming crypto market and increase tax revenue.

“Such a tax could stifle innovation and growth in the cryptocurrency industry, which has been a source of significant investment and job creation,” Menon said. There are also concerns that such a tax would encourage mining firms to relocate to other countries with more favorable taxes. may be induced to do.” regime, potentially hurting the US economy.”