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The USABTC policy group has proposed a pioneering initiative to create a tax-free Digital Economic Zone (DEZ) for Bitcoin, aimed at bolstering the US economy and ensuring the dollar’s global dominance.
Proposal for a Bitcoin Tax-Free Digital Economic Zone
A new initiative in the United States seeks to position the country as a global leader in the digital economy through the establishment of a Bitcoin tax-free Digital Economic Zone (DEZ). This proposal, led by the newly formed USABTC policy group, envisions a zone where Bitcoin can be traded and accumulated without capital gains taxes, although a tax would be applied upon redemption.
According to USABTC, this initiative could secure the US’s financial future by fostering a “resilient and innovative” economic environment, leveraging Bitcoin’s potential while maintaining the central role of the dollar.
Strategic Approach to Bitcoin
Bitcoin has already prompted policymakers worldwide to reconsider traditional financial strategies. The USABTC proposal suggests that a direct government purchase of Bitcoin would be impractical and politically challenging. Instead, it advocates for a DEZ where Bitcoin transactions are tax-free, with a taxed redemption process to ensure government revenue.
The proposal argues that offering tax-free capital gains within this zone could attract investors and promote wealth growth in a regulated environment. The exit tax on Bitcoin conversions back to traditional currency could provide a new revenue stream benefiting both federal and state treasuries.
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As part of the plan, USABTC envisions the creation of a pegged Bitcoin system on a layer-2 solution to ensure efficient and secure transactions.
The proposal outlines a phased implementation approach, beginning with the President issuing an executive directive to authorize the use of the Exchange Stabilization Fund (ESF), a tool within the US Treasury established by the Gold Reserve Act of 1934. Subsequent phases would include drafting legal opinions, legislative efforts, and extensive public outreach to ensure broad understanding and support.
The Internal Revenue Service (IRS) would also collaborate to establish a robust legal framework and approve the proposed tax structure.
USABTC asserts that if successful, this initiative could significantly enhance the US’s position as a leader in the digital economy. It also aims to protect against government overreach, a concern for many in the cryptocurrency community, by enshrining the right to self-custody into law.
The implementation phases of USABTC’s plan are scheduled to begin in 2025. If all legislative and regulatory approvals are secured, the DEZ could be fully operational by 2026.
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