Florida is once again paving the way when it comes to wide-scale adoption of cryptocurrency by becoming the first state to propose a bill that would completely eradicate capital gains tax on the most popular form of cryptocurrency–Bitcoin. Should it be approved, this change will also see capital gains tax removed from XRP and stocks. Not only will this drastically improve the lives of Florida-based crypto investors, but it could also help increase the price of Bitcoin, and may be the push the currency needs to reach £135,000 in the next three months.
Why People Invest in Cryptocurrency
The reasons that individuals have for investing in any kind of digital assets vary wildly, however, the most popular reason is in an attempt to make a profit. Due to the volatile nature of cryptocurrency, meaning the tendency of digital assets to rise and fall in value over time, investors can see substantial returns by strategically buying and selling crypto at specific times. Some investors even go as far as to utilise the best crypto margin trading platforms, which enable them to amplify their profits and gain trading commission while doing so.
What the Bill Means
Should the proposed bill be accepted, then Florida residents will receive an exemption from capital gains tax on any transactions made with Bitcoin, XRP or stocks. This tax relief will take place at the state level, however, it should be noted that federal gains tax would be unaffected and therefore would still apply.
Why the Bill is Being Proposed
The primary reason for the proposal of the bill speaks to one of the primary objectives of the government in the US, under the current president, which us to increase the overall adoption of cryptocurrency on a country-wide scale. Lawmakers and crypto enthusiasts hope that by removing capital gains tax on crypto transactions, more people will be drawn to the world of cryptocurrency, and more Florida-based businesses will begin to integrate digital assets. The bill reflects a multi-state effort to increase crypto usage, such as the creation of strategic cryptocurrency reserves to be used by the state treasurers for the betterment of the state, but Florida has taken this one step further in a way no other state has yet proposed.
Mixed Opinions
As can be expected, the proposed bill has caused quite a split of opinion amongst Florida residents and financial experts. Those in favor believe the bill will help secure Florida’s position as the crypto hub of the United States. They believe that, by removing capital gains tax, more big investors, such as those on an institutional level, will consider adopting cryptocurrency themselves. However, those who have shown reservations have voiced concerns that such a drastic change could complicate tax compliance and generate disparities with federal regulations.
The Rising Price of Bitcoin
Bitcoin has seen an unprecedented surge in price in recent months and now has an estimated value of over $103,000. This is especially impressive when we remember that, upon its creation in 2009, Bitcoin’s value didn’t even reach a dollar. Many things contribute to the price fluctuations of Bitcoin, and this new proposed bill is certain to be one of them. Crypto market analysts expect that the bill could see the price of Bitcoin rise to an unprecedented $135,000 in the next three months. Even though the market has been choppy in recent weeks, stabilization is expected, and those who start or continue investing in Bitcoin due to the knowledge that they will not be charged capital gains tax on their purchases are certain to contribute to the coin’s expected surge.
In addition to Florida’s proposed bill, several other substantial factors are likely to contribute to Bitcoin’s expected price surge. The first of these is a period of strong on-chain fundamentals, which includes both a rise in active addresses and a fall in exchange reserves. Additionally, on an institutional level, many large entities are beginning or continuing to invest in Bitcoin, creating their own Bitcoin reserves. Finally, macroeconomic tailwinds are certain to contribute, including federal reserve rate stability and an increase in demand for digital safe-haven assets.
However, after the surge, Bitcoin is expected to drop in price again, and experts suggest it could fall to just $90,000. This would not be an overtly negative scenario but would rather reflect normal market corrections. After this, the price should begin to rise again, this time more steadily.
Further Effects of the Florida Bill
Alongside contributing to the bullish momentum that Bitcoin is expected to experience, the Florida bill, if accepted, could have a number of other ripple effects. Firstly, the bill is certain to prompt more people and companies to invest in cryptocurrency more generally. Additionally, it is also likely that a snowball effect regarding other US states will take place, with others proposing similar bills. As such, the more traction that is gained, the more likely it is that the bill could bring the future of clear crypto taxation and regulation closer than it would have been otherwise.
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