A new proposal by the USABTC policy group aims to establish a tax-free Digital Economic Zone (DEZ) in the United States specifically for Bitcoin. This initiative seeks to enhance the U.S. digital economy by allowing Bitcoin transactions to occur without capital gains taxes, although a tax would be imposed upon redemption into traditional currency. The goal is to attract investors and foster economic growth while ensuring revenue generation through an exit tax on Bitcoin conversions back to fiat currency.
Tax-Free Transactions: The DEZ would enable tax-free trading and accumulation of Bitcoin, promoting investment in the cryptocurrency sector.
Exit Tax: While transactions within the DEZ would be tax-free, a tax would be levied when Bitcoin is converted back to traditional currency, creating a potential revenue stream for federal and state treasuries.
Implementation Phases: The proposal outlines a phased approach starting with an executive directive from the President to utilize the Exchange Stabilization Fund (ESF). This would be followed by legal drafting, legislative efforts, and public outreach to build support.
Regulatory Collaboration: The Internal Revenue Service (IRS) would be involved in establishing a legal framework for the DEZ, ensuring compliance and clarity for investors.
Timeline: If approved, the DEZ could begin operations in 2025, with full functionality expected by 2026.
USABTC believes that this initiative could position the U.S. as a leader in the digital economy, offering a balanced approach that encourages investment while maintaining government revenue.