Following the news that US President Joe Biden will offer an increase in capital gains tax, there was a big sell in the cryptocurrency market last week. The Biden administration defended the tax increase, saying that it would only affect the “very rich”.
A senior official in the Biden administration suggested that only 0.3 percent of taxpayers in the United States would be affected by the tax increase on investments under the new capital gains tax scheme.
Under Biden’s new tax plan, the capital gains tax on wealthy taxpayers will be raised from 20 percent to 39.6 percent. Those who earn more than $ 1 million will have to tax 43.4 percent of their earnings, along with the current additional tax.
The official who made the statement said the new tax plan is in line with Biden’s stance of increasing the tax levied on very wealthy people for use in social programs.
Both the crypto industry and the U.S. exchanges have witnessed a massive sale following the spread of Biden’s tax regulation proposal news, and fear, uncertainty and suspicion in the market, known as the FUD, increased. Bitcoin (BTC) also fell significantly in value, losing its support of $ 50,000 and dropping to $ 47,500 before recovering earlier in the week.
Names like veteran investor Peter Brandt and Cardano Founder Charles Hoskinson think that the new tax regulation could have devastating consequences for the crypto industry if passed, while Messari CEO Ryan Selkis thinks that this regulation could benefit DeFi assets as investors seeking tax avoidance tend to turn to it.