Bitcoin and the US Fiscal Policy
Bitcoin has often come under sharp scrutiny and criticism from the government. There have been efforts in the past to ban or increase the regulation of Bitcoin. Some lawmakers have been so vocal in pushing for the ban of Bitcoin. Such attempts have failed so far. Bitcoin remains widely popular within the US. You can use Bitcoin Motion to start trading Bitcoin as well as other cryptocurrencies.
Bitcoin’s Popularity
Over the years, Bitcoin usage has realized a significant rise. Today, there are over 68 million Bitcoin users in the country alone. This number has grown to over 109 million globally, and users are not just individuals. Institutional users are also adopting Bitcoin. Some estimates show that at least 21 percent of hedge funds in the country now own Bitcoin.
Bitcoin enhances trading and business. As a peer-to-peer digital asset, it eliminates intermediaries making transactions cheaper and faster. Additionally, anyone can benefit from trading in Bitcoin.
Bitcoin and Fiscal Policy
Bitcoin is an asset and a decentralized digital currency. As such, it is not under the direct control of any central authority, including the government through the central bank. And this is the basis of understanding the relationship between Bitcoin and US fiscal policy. Generally, the relationship is not good.
Since the US government cannot control Bitcoin like it does the dollar, this has made the government challenge it. The government has often perceived Bitcoin as a significant threat to fiscal policy and its power over it. Since users can move Bitcoin anonymously across the world, the government sees it as a significant problem because people can use it for criminal activities.
In reality, individuals with criminal intentions like terrorists and drug traffickers can use Bitcoin to avoid capture by law enforcement agencies. From a fiscal policy viewpoint, this means that Bitcoin undermines the role of the government in preventing such criminal activities. This disempowerment is a problem that the current US fiscal policy suffers through Bitcoin.
Bitcoin and Tax Obligation
The other problem between Bitcoin and the US fiscal policy is tax obligation. Every eligible citizen has a tax obligation, and the government expects them to file their taxes accordingly. It is through the filing of taxes that the government can notice those that are not paying their taxes.
With Bitcoin, the government recently introduced regulations requiring crypto exchanges to notify users and IRS about Bitcoin transactions. However, this isn’t easy, and many entities still avoid reporting their Bitcoin transactions and assets. The government cannot find such entities easily because Bitcoin does not operate like traditional fiat currency.
For instance, the government can easily track your dollars through your bank with the US dollar. Bitcoin operates virtually on the blockchain platform that is very hard for the government or any other entity to track. When you buy Bitcoin and store it in a personal digital wallet, the government cannot access it without your permission or assistance.
Bitcoin and the US Dollar
Bitcoin also threatens the US dollar, which is the national currency. First, many transactions are now using Bitcoin instead of the dollar. If Bitcoin usage continues to grow unchecked, it may reach a time when it replaces the US dollar. And this is a matter of concern for the government because it will lose control over the most popular currency.
Moreover, some have hinted that Bitcoin could even replace the dollar and become the global reserve currency. At the moment, the US dollar takes this position. With Bitcoin’s growing international use, there may come a time when it replaces the dollar as the global reserve currency.
Take Away
Bitcoin doesn’t fall under the purview of the US fiscal policy. It presents a significant threat to fiscal policy and the government’s control over it. There have been attempts to regulate Bitcoin, and more similar efforts are likely soon.
