"Trump's Crypto Tax Plan: A Double-Edged Sword for Global Markets"

In January, following Donald Trump's inauguration, reports emerged suggesting that his son, Eric Trump, had confirmed a potential plan to exempt U.S.-based cryptocurrencies from capital gains tax, while imposing a 30% tax on non-U.S. based cryptocurrencies. This proposal has raised concerns about its potential impact on the global crypto industry.

The elimination of capital gains taxes on U.S.-based cryptocurrencies might seem appealing to American investors, but it could have significant consequences. The global crypto market could experience market turbulence as U.S. investors may dump non-U.S. cryptocurrencies, take the tax hit, and rotate some of their capital into domestic options. This could increase sell pressure on global projects, particularly those with significant U.S. investor exposure.

Moreover, implementing this change before sound regulations are in place could have far-reaching, long-term consequences. A surge in the creation of new cryptocurrencies from the U.S. could lead to a repeat of the 2017 Initial Coin Offering (ICO) boom, where nearly 80% of projects collapsed or turned out to be scams within two years. This could drive away potential investors, damaging the credibility of the crypto industry.

The U.S. may be home to major crypto projects, but it has also been a breeding ground for scam tokens. Global crypto startups may face challenges securing funding if U.S. venture firms favor local projects to maximize tax-free returns on token allocations. This could drain investment from emerging markets, where crypto is often used for real-world financial inclusion. Additionally, other countries implementing similar zero capital gains tax policies could lead to a flooded market, fragmented trading, and dried-up liquidity for most tokens.

In conclusion, the U.S. taking this approach risks skewing the market, incentivizing artificial token creation, and isolating American investors from the global crypto economy. What seems like a tax break now might end up killing competition, pumping money into scams, and hurting crypto's credibility in the long run.