Rumors are rife, will Trump's cancellation of crypto profit tax be implemented?

The market is a huge Christmas tree. Yesterday, the market was still immersed in the positive news brought by Trump's support for cryptocurrencies, but it only took a day for BTC to fall back to its starting point, wiping out the entire rally triggered by Trump's remarks, drawing a painful door for the market. However, the market has finally grasped a lifeline and has not easily given up the possibility of extracting more positive news for the market from Trump. On the morning of March 4th, Alpine Fox LP founder Mike Alfred tweeted that the Trump administration may announce a policy of zero capital gains tax on cryptocurrency sales at the crypto summit on Friday. As for Mike Alfred's claim that "Trump is preparing to announce a zero tax rate for cryptocurrencies," Cinneamhain Ventures partner Adam Cochran directly refuted it: "Mike blocked me because I repeatedly verified his facts, but that doesn't stop me. The president cannot unilaterally modify the tax law. Only Congress can. This is one of the few minority powers of Congress explicitly stated in the Constitution. Even if the president announces the decision or tries to sign an executive order for it, it will not make it law. This is no more effective than my claiming to be a cupcake." Eliminating the capital gains tax on cryptocurrencies would be a big deal for the crypto market itself, market participants, and the U.S. government. Naturally, social media is in constant debate over the authenticity of such a major event. Setting aside the market noise, let's first look at what impact the crypto tax exemption would have on the market if it succeeds, and what factors would constrain it if it doesn't. How are cryptocurrencies taxed now? First, let's talk about the current situation. According to the Coinbase tax guide, in the U.S., cryptocurrencies are not considered "currency," and the IRS (Internal Revenue Service) defines them as "property." If you buy BTC and sell it at a profit, the money you make is subject to capital gains tax. The tax rate also depends on how long you hold the coins: That is, if a U.S. citizen bought $10,000 worth of BTC, and it went up to $20,000 in three months, the $10,000 net profit would be taxed at the ordinary income tax rate (10%-37%), possibly costing a few thousand dollars. If you held it for a year or more before selling, the tax rate would be lower, and you might only pay a thousand or two, or even be exempt from tax if your income is low. But in any case, taxes are unavoidable. Of course, it's not just trading, the ordinary income tax on cryptocurrencies applies to mining, staking, wage payments, airdrops and other activities involving cryptocurrencies, and individuals need to report the fair market value at the time of receipt and pay taxes at the ordinary income tax rate (10%-37%). What if it's really zero capital gains tax? Assuming Trump really cancels the capital gains tax on crypto assets, what impact would that have? Setting aside the high-level analysis, let's talk about how the market and ordinary people would fare. For the market, the removal of tax restrictions would naturally embolden more hot money in the U.S. to invest, and short-term trading behavior would increase due to the lack of tax constraints, amplifying short-term market volatility. More crypto project teams would also be attracted by the zero-tax policy, with major projects migrating to the U.S., making the U.S. the "crypto asset capital" that Trump promised. The only downside is that letting the market off the hook is essentially letting the government bleed, as the government will lose the tens of billions of dollars it collects in crypto taxes each year, and the public budget will have to be recalculated, with infrastructure, healthcare and other expenditures potentially having to be squeezed from elsewhere. If you're an ordinary U.S. taxpayer who doesn't touch cryptocurrencies, learning that the crypto-rich are exempt from taxes while you still have to pay income tax honestly, you can't help but feel a sense of imbalance. In short, if the current U.S. crypto capital gains tax doesn't affect you at all, the (potentially) tax-free policy may or may not have an impact on your personal crypto asset earnings, and it's not appropriate to simply describe it as a positive or negative. Rumors abound, but will it ultimately succeed? There have been rumors about changes to the taxation of cryptocurrencies before. In January, The Street reported that Trump's crypto-enthusiast son Eric Trump confirmed that top U.S. crypto projects like XRP and HBAR would enjoy a zero capital gains tax, while non-U.S. projects would face a capital gains tax of over 30%. Satoshi Action Fund co-founder Dennis Porter said that completely eliminating the crypto tax is unrealistic in the short term, but changes like a "minimum exemption" are worth fighting for. So even if the slogan is shouted loudly, the tax law is not something that Trump alone can decide. The U.S. Constitution stipulates that changes to tax policy must be approved by Congress, and while the Republican Party may support it, the Democratic Party may not. Moreover, the U.S. local tax system is complex, with varying policies in different states, and reaching a unified consensus is a lengthy problem. Epilogue: Dreams are good, but perhaps we'll have to wait a little longer Looking solely at the cancellation of the crypto capital gains tax, it is an incredibly wonderful wish for the vast majority of market participants. If it comes true, it will certainly be able to pull the currently struggling market back up and fight again. But returning to reality, the market changes and a series of social issues brought about by the zero-tax rate are hurdles that policymakers cannot avoid, so this wish may only be able to be held in expectation in the short term. In the author's view, this is more like one of the many big pies drawn for the crypto market, looking delicious, but whether it can be successfully eaten in the end depends on the mood of Congress. For us retail investors, we can dream, but we also need to keep our wallets tight, not to go all in just because we hear a little wind.