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“Bitcoin Should Be Banned or Taxed”

The Federal Reserve Bank of Minneapolis has suggested that if the government bans or taxes bitcoin, it will run a permanent budget deficit.

An Oct. 17 report from the Minneapolis Fed suggested that Bitcoin would cause problems at a time when the government is trying to run a persistent deficit using nominal debt. According to the report, governments need to tax or ban assets such as Bitcoin to maintain budget deficits.

“Bitcoin is a problem for governments”

The Minneapolis Fed claimed that Bitcoin introduced the “balanced budget trap,” an alternative situation in which the government is forced to balance its budget.

The following statements were included in the research report.

“A potential ban against Bitcoin could provide unprecedented enforcement of persistent underlying vulnerabilities. Bitcoin could also be taxed.

A primary deficit occurs when governments spend more than they collect in taxes and other revenues. The term “permanent” for a primary deficit means that the government plans to spend more than it receives indefinitely.

The total accumulated national debt of the United States is over $35.7 trillion. On the other hand, the primary deficit, which is the annual difference between tax revenues, is about $1.8 trillion.

Reuters reported that this year’s deficit, the largest outside the COVID-19 period, was related to treasury spending. Interest costs on Treasury debt rose 29 percent to $1.13 trillion, the news reported.

Matthew Siegel, head of digital asset research at VanEck, commented on the Minneapolis Fed’s statements regarding Bitcoin. Sigel noted the following;

“The government is dreaming of a ‘legal ban’ and an additional tax on BTC to ensure that its debt remains ‘just a risk-free security’.”

ECB advisor Jürgen Schaaf takes a stand against Bitcoin. Schaaf said the following sentences:

‘There are compelling reasons to advocate for policies that will slow or even kill Bitcoin’s growth.’

Statements that the USA should take a stand against Bitcoin to continue printing money have attracted attention. On the other hand, US presidential candidate Donald Trump announced that he will convert BTC into a strategic reserve if elected.

This article does not contain investment advice or recommendations. Every investment and trading venture involves risk, and readers should do their own research when making decisions.

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