Digital Asset Investors Embody Bullish Optimism Amid Policy Shifts Opinion

The cryptocurrency market has seen an infusion of bullish optimism following Donald Trump’s victory in the 2024 presidential election, with investors anticipating pro-digital asset policies under his administration. This newfound confidence has fueled a significant surge in Bitcoin's value, which has steadily climbed towards the $100,000 mark, hitting multiple milestones along the way.

The rally has been reminiscent of the speculative fervor seen during Bitcoin’s early days, with its price crossing the $98,800 threshold on November 21, a new record. This price surge coincided with the announcement that Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), will step down on January 20, the same day Trump is set to be inaugurated as president. As the Bitcoin momentum builds, it appears the cryptocurrency market is regaining its former global prominence.

Bitcoin Payments in Sports: A Major Milestone

A notable development in the intersection of sports and cryptocurrency has emerged in the UAE, where the Bitball Flag Football showdown is set to become the first NFL event where athletes are paid in Bitcoin. The game, which will feature several major names from American football, is part of the growing movement that advocates for athlete financial sovereignty. This event is organized through the International Federation of American Football (IFAF) and has gained significant attention, especially after the game became part of the 2028 Summer Olympics.

Among the trailblazers is Russell Okung, an eleven-year NFL veteran and Super Bowl Champion, who famously became the first professional athlete to receive his salary in Bitcoin. George Mekhail, Vice President of Operations at BTC Inc., emphasized the importance of this event, calling it a demonstration of the Bitcoin community’s resilience and collaboration. He highlighted Okung’s role in empowering athletes through Bitcoin, noting how such initiatives move the digital currency into mainstream visibility.

The event will feature a star-studded roster of over 22 former NFL players, including Antonio Brown, Le’Veon Bell, and Dez Bryant. This unique event is part of Bitcoin MENA 2024, a significant gathering of Bitcoin investors, developers, and stakeholders, taking place in Abu Dhabi on December 9-10, 2024. Attendees will have free access to the Bitball Flag Football match, which will be broadcast live via Bitcoin Magazine’s platforms, Rumble, and YouTube, allowing global audiences to partake in this groundbreaking blend of sports and digital assets.

Taxation on Digital Assets: A Complex Landscape

For the players involved in the Bitball Flag Football game, the absence of an income tax in the UAE provides significant advantages. The country has recently abolished the value-added tax (VAT) on digital asset transactions, positioning itself as a prime destination for cryptocurrency innovation. However, U.S. citizens involved in the event will still be subject to worldwide income tax on their digital asset earnings, which are classified as property under U.S. tax law.

Understanding U.S. Taxation on Digital Assets

The IRS treats digital assets in a manner similar to property, meaning that gains or losses resulting from their sale or exchange are subject to capital gains tax. Income earned through digital assets—such as salaries or rewards in Bitcoin—may be taxed as ordinary income. Several scenarios trigger this taxation, including:

• Receiving digital assets as payment for services
• Mining digital assets as a hobby
• Earning rewards from staking, airdrops, or DeFi protocols

For U.S. tax purposes, digital assets held as investments are taxed at different rates. Short-term capital gains (assets held for less than a year) are taxed between 10% to 37%, depending on income levels. Long-term gains (assets held for over a year) are subject to a more favorable tax rate of 0%, 15%, or 20%, depending on taxable income.

Digital Asset Taxation: Strategies and Reporting

Investors in the U.S. can take advantage of certain tax allowances to reduce their tax liabilities. For instance, gifting digital assets under $18,000 per recipient is tax-free under the annual gift tax exclusion. Additionally, long-term capital gains on digital assets are eligible for a tax-free allowance if the investor's total income falls below $47,026 in 2024. However, losses from digital asset investments can offset gains, reducing overall tax burdens.

When it comes to tax reporting, the IRS has made digital asset disclosure mandatory on tax forms, including Form 1040, which now includes a question about digital asset transactions. Investors must report gains, losses, and income from digital assets, with specific forms for income (Schedule 1) and capital gains (Schedule D, Form 8949).

IRS Tracking and Tax Evasion Cases

The IRS is intensifying efforts to track digital asset transactions. Recently, the agency has won cases forcing cryptocurrency exchanges like Coinbase and Kraken to release user data. The IRS has also pursued cases of tax evasion involving digital assets, most notably the conviction of Frank Richard Ahlgren for underreporting gains from Bitcoin sales.

With the growing scrutiny from the IRS and state tax departments, digital asset investors are advised to carefully review their tax obligations and ensure they remain compliant with all reporting requirements.

Conclusion

The confluence of increasing regulatory clarity and pro-digital asset policies under the incoming Trump administration has created a sense of optimism within the digital asset community. As Bitcoin and other cryptocurrencies break new price records, investors are closely monitoring policy developments and tax regulations to navigate this evolving landscape. Whether in the sports arena or through evolving tax structures, the continued adoption of digital assets marks a transformative shift in both the financial and cultural spheres.