A new policy initiative, USABTC, proposes establishing a Bitcoin tax-free Digital Economic Zone (DEZ) in the United States. This initiative aims to position the country as a leader in the crypto sector without needing to add Bitcoin to its reserves.
The proposal highlights that creating a Bitcoin reserve could cost up to $200 billion, a significant expenditure that Congress might oppose. Instead, the DEZ would allow Americans to invest in and trade Bitcoin without incurring capital gains taxes while only paying taxes upon redemption.
How DEZ will integrate Bitcoin into US economy
USABTC’s policy suggests that if the government adopts this strategy, Bitcoin can be seamlessly integrated into the American financial system at no additional cost. Supporters believe this approach will bolster the US economy and preserve the dominance of the US dollar. Additionally, taxing Bitcoin redemptions could provide a new revenue stream for the government.
The proposal also mentioned that it aims to reduce the threats from foreign countries that want to weaponize Bitcoin against America’s best interests. The policy includes a framework to actualize the policy, involving collaboration with different regulators, including the US Treasury and the Internal Revenue Service (IRS).
It would also require legislative actions to provide stringent safeguards to prevent government overreach and asset confiscation. USABTC posits that the initiative can be brought into effect as early as 2026 if implementation begins next year.
Community reacts as pro-crypto policy gains momentum in the US
The policy has attracted interest from the crypto community, with mixed reactions. Some users on X consider it a massive step forward if it succeeds. However, some people are concerned that this proposal would give the government control over the Bitcoin of US citizens.
lol who would want to use this. It’s a 20% exit tax. So you get taxed 20% cap gains when you sell or you get taxed 20% exit tax with the USABTC “zone.” To make matters worse, users have to deposit their BTC into the hands of the govt instead of having full custody of it on their…
— DΛVID 🟢 (@DavidShares) August 7, 2024
While debates on the issue are likely to continue, the policy is the latest example of efforts by stakeholders within the crypto industry to increase adoption within the US. To achieve this, crypto companies and stakeholders have devoted significant resources to electing pro-crypto legislators and candidates.
So far, the approach has yielded results, as crypto is now one of the key issues in the presidential elections. Donald Trump has emerged as the number one cheerleader for the crypto industry, promising to implement pro-crypto policies if elected. One of his plans is to create a Bitcoin reserve, and Senator Cynthia Lummis has presented a bill to that effect on the Senate Floor.
However, Vice President Kamala Harris’s team has also been courting the crypto industry. Although she has yet to declare her support for the industry publicly, her team has reached out to several crypto stakeholders, and a pro-crypto advocacy group has been launched for her campaign.
