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A new study published by the Minneapolis Federal Reserve Bank suggests that Bitcoin 
$103,051 and similar cryptocurrencies should be taxed or banned to manage persistent budget deficits. According to the research, Bitcoin’s fixed supply complicates fiscal policies.
Fed Perspectives
The study released on October 17 highlights that Bitcoin’s existence in the economy creates a “budgetary balance trap.” This situation forces governments to balance their budgets due to Bitcoin’s fixed supply and the absence of real resource demands.
Matthew Sigel, head of digital asset research at VanEck, compared the Minneapolis Fed’s stance with criticisms from the European Central Bank. Sigel stated that both institutions aim to position government debt as the only risk-free asset.
“They aim to position government debts as the only risk-free guarantee.” – Matthew Sigel, VanEck
Despite criticisms, the institutional adoption of cryptocurrencies is rapidly increasing. Following the approval of spot Bitcoin and Ether ETFs in 2024, 80% of institutional investors plan to increase their investments.
Critical Opinions
Neel Kashkari, president of the Minneapolis Fed, criticized cryptocurrencies as tools for criminal activities. Kashkari noted that “very few transactions occur with cryptocurrency,” indicating that it mainly serves illegal activities.
Nic Carter criticized the Fed official’s views, stating, “Such bias should be prohibited.” Meanwhile, the crypto community has reacted in various ways to these criticisms.
The rise of institutional investment signals growth in cryptocurrency markets. Investors continue to maintain and plan to increase their interest in crypto assets despite regulatory agencies’ attitudes.
