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US Cryptocurrency Holders Could Owe $25 Billion in Taxes

Tom Lee, former chief equity strategist for JP Morgan Chase, has often provided insights on the cryptocurrency market and Bitcoin; in a recent CNBC interview, he estimated that cryptocurrency holders in the United States owed around USD 25 billion in capital gains taxes.

US tax date impacting market

Lee believes that the present cryptocurrency sell-off is in anticipation of the looming US tax day on 17 April; he also believes that sometime after this date, “market misery” and selling pressure will begin to alleviate, pushing the market back up.

On 23 March, the Internal Revenue Service (IRS) released a notice describing its treatment of cryptocurrency as virtual currency and, therefore, general property taxation principles and laws were applicable. The small reminder from IRS may be partly responsible for the present sell-off which is profoundly impacting the market.

“This is a massive outflow from crypto to USD, and historical estimates are each $1 of USD outflow is $20-$25 impact on crypto market value,” Lee added in the CNBC report.

Wheels spinning in the USA

The US is undergoing a shift of attitude toward Bitcoin and cryptocurrency practices overall. Since February, the state of Arizona has been passing realistic and promising bills through the Arizona House of Representatives which would reshape how the state interacts, regulates and utilizes cryptocurrencies as well as initial coin offerings (ICOs).

The HB2603, HB2602, and HB2601 bill package, if finally voted law, would mean that Arizona would be the first state to accept cryptocurrency as payment for taxes. Providing a legal definition for tokens and amending old legislation would protect individuals who run blockchain nodes, which is primarily an issue of energy costs caused by computing power.

There is an oddly positive tone emanating from the US; BitcoinNews recently reported that Jay Clayton, chairman of the US Securities and Exchange Commission (SEC) had begun to change his tone on ICOs. He aptly identified the need for lawmakers and regulators to tackle fraudulent blockchain activities to prevent the legal frameworks from restricting “the capacity of this new security”.

In another turn of events, cryptocurrency firm Coinbase is reportedly “in talks” with SEC in regards to the trading platform becoming a licensed and regulated virtual money entity.

If Tom Lee is correct, capital gains tax made from cryptocurrency this tax period will account for about 20% of the US total. If these estimations are anywhere near accurate, it could be an indication to the government to seriously consider blockchain technologies and their accompanying cryptocurrencies as a vital fabric in the weave of technological and financial advancements of the future.

 

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