Federal Reserve Proposes Bitcoin Ban and Taxes to Combat Deficits; Global Regulators Join Push
October 22, 2024A recent research paper from the Federal Reserve, released on October 17, 2024, proposed banning Bitcoin and imposing taxes on it as a strategy to address ongoing government budget deficits.
In light of this research, global regulators, including the Federal Reserve Bank of Minneapolis and the European Central Bank (ECB), are actively discussing aggressive measures aimed at eliminating Bitcoin.
Bitcoin analyst Tuur Demeester has voiced concerns over the ECB's proposals, describing them as the most aggressive yet from authorities, indicating that Bitcoin is perceived as an existential threat.
ECB economist Jürgen Schaaf emphasized the societal implications of Bitcoin, noting that its rising prices tend to benefit early investors while potentially impoverishing latecomers and non-investors.
Schaaf also warned that the wealth redistribution resulting from Bitcoin's growth poses a threat to societal stability, urging the implementation of policies to curb its expansion.
The paper argues that Bitcoin creates a 'balanced budget trap' for governments, limiting their ability to sustain permanent primary deficits.
Researchers assert that Bitcoin's fixed supply and decentralized nature challenge traditional fiscal strategies, positioning it as an alternative financial asset.
Despite the mounting regulatory pressures, historical attempts to ban Bitcoin have largely failed, with over 57% of Bitcoin currently held by private individuals.
Matthew Sigel from VanEck noted that the Minneapolis paper signifies a notable escalation in efforts targeting Bitcoin, although he maintains a positive long-term outlook for its adoption.
The crypto community has reacted strongly against these regulatory proposals, perceiving them as a direct attack on Bitcoin.
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