Last
month,
Kamala
Harris
endorsed
a
controversial
25%
tax
proposal
on
unsold
assets.
While
Silicon
Valley
was
up
in
arms
about
the
plan,
it
barely
registered
with
crypto
investors
who
the
plan
would
hit
hard.
At
its
core,
an
unrealized
capital
gains
tax
would
require
individuals
to
pay
taxes
on
the
appreciation
of
their
cryptocurrency
holdings,
even
if
they
have
not
made
a
single
sale.
Such
a
move
could
crush
cryptocurrency
markets.
The
so-called
“wealth
tax”
is
a
radical
departure
from
traditional
tax
principles,
which
only
apply
to
gains
realized
when
an
asset
is
sold.
The
plan
would
have
devastating
consequences
for
crypto
investors
and
the
broader
economy
and
undermine
the
inherent
value
of
cryptocurrencies
as
a
store-of-value
that
operates
outside
the
clutches
of
any
singular
government.
Harris
and
supporters
of
the
proposal,
first
introduced
in
President
Biden’s
last
budget
proposal,
have
defended
the
tax
as
a
levy
on
Americans
worth
more
than
$100
million.
The
wealth
tax
would
“address
substantial
inequities
in
our
tax
system,”
one
White
House
official
responding
to
the
furor
told
Axios.
But
the
plan
would
hurt
all
investors
by
encouraging
a
sell-off
by
larger
investors
to
fund
their
tax
payments.
This
sell-off
would
drive
down
the
price
of
cryptocurrencies
and
impact
returns
for
everyday
investors,
including
those
who
have
only
invested
small
amounts
in
the
hope
of
improving
their
economic
situation.
Prolific
bitcoin
investors
such
as
Tim
Draper,
Michael
Saylor,
and
Tyler
and
Cameron
Winklevoss
would
be
slapped
with
tax
bills
of
up
to
$1
billion.
Yes,
that’s
a
billion,
not
a
million.
Their
crime?
Recognizing
the
value
of
bitcoin
before
the
majority
of
investors
and
purchasing
the
asset
early.
The
Winkelvoss
twins,
who
bought
their
bitcoin
in
2013
when
it
was
trading
at
$10,
would
be
forced
to
pay
$1
billion
to
the
Internal
Revenue
Service.
Draper,
who
invested
in
2014
at
a
cost-basis
of
approximately
$632
per
coin,
would
be
slapped
with
a
$423
million
tax
bill,
according
to
Meanwhile
analysis.
Saylor,
who
personally
holds
17,732
BTC,
would
be
required
to
pay
the
IRS
$212
million.
Because
of
how
well
bitcoin
has
outperformed
in
the
last
decade,
the
tax
liabilities
would
be
enormous.
Over
the
last
five
years,
the
price
of
bitcoin
is
up
700%.
Over
the
last
10
years,
that
figure
is
17,000%.
Anyone
with
a
basic
understanding
of
the
value
of
cryptocurrencies
can
see
how
this
proposed
tax
would
discourage
long-term
investment
and
encourage
short-term
trading.
Diamond
hands
would
be
punished
for
believing
in
the
long-term
promise
of
bitcoin
and
forced
to
pay
a
king’s
ransom
on
assets
they
hadn’t
yet
cashed
out
on.
What’s
more,
the
move
would
stymy
innovation
and
financial
prosperity
across
the
board.
Wealthy
Americans
who
own
trillions
of
dollars
worth
of
stock
would
be
forced
to
sell
enormous
tranches
of
holdings
to
also
fund
their
tax
bills,
while
startup
founders,
largely
compensated
in
equity,
would
be
discouraged
from
taking
their
businesses
public.
Marc
Andreessen,
the
founder
of
top
venture
capital
firm
Andreessen
Horowitz,
said
in
a
July
podcast
episode
that
startup
companies
would
be
“completely
implausible”
if
the
tax
was
enacted,
while
entrepreneur
Mark
Cuban
told
Fox
Business
that
the
proposal
would
“kill
the
stock
market.”
The
crypto
industry
is
already
being
hammered
by
a
SEC
determined
to
rule
through
enforcement
rather
than
provide
clear
rules
of
the
road.
Most
companies
want
to
do
the
right
thing,
but
innovation
is
impossible
under
constant
regulatory
threat.
The
IRS
and
SEC
are
often
forced
to
enforce
ambiguous
laws
that
don’t
necessarily
fit
with
new
technologies.
But
in
this
case,
the
impact
is
clear
—
stifling
innovation
and
hurting
the
little
guy
(even
with
the
appearance
of
only
affecting
the
ultra
wealthy).
The
proposed
unrealized
capital
gains
tax
is
a
flawed
and
dangerous
policy
that
would
have
unintended
negative
consequences
for
all
crypto
investors,
not
just
those
worth
more
than
$100
million.
Instead
of
stifling
innovation
and
discouraging
investment,
the
government
should
focus
on
creating
a
supportive
regulatory
environment
that
fosters
the
growth
of
the
crypto
industry.
By
doing
so,
we
can
harness
the
full
potential
of
cryptocurrencies
to
drive
economic
growth
and
improve
the
lives
of
people
around
the
world.
If
the
goal
of
the
Biden-Harris
administration
is
to
raise
huge
sums
for
a
social
safety
net,
perhaps
they
might
consider
investing
some
of
their
own
money
in
bitcoin
and
creating
a
strategic
national
reserve,
instead
of
chasing
investors
who
saw
the
promise
of
HODLing
a
long
time
ago.
Note:
The
views
expressed
in
this
column
are
those
of
the
author
and
do
not
necessarily
reflect
those
of
CoinDesk,
Inc.
or
its
owners
and
affiliates.
