Donald Trump's tax and spending package, known as 'One Big Beautiful Bill', has passed through both chambers of Congress and awaits the president's signature. This event triggers debates and discussions among experts about its impact on the cryptocurrency market.
What’s in the Big Beautiful Bill
The bill includes key elements of Trump’s second-term agenda. It permanently extends most provisions of the 2017 Tax Cuts and Jobs Act, boosts funding for border security, defense, and energy production, while enacting significant cuts to Medicaid and nutrition programs like SNAP. The bill is expected to add approximately $3.4 trillion to the federal deficit over the next decade, a projection disputed by Republicans.
A notable aspect is the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), which creates the first federal regulatory framework for stablecoins. It mandates:
- 1:1 reserve backing in dollars, treasury bills, or similar high-quality assets, - Regular public disclosures and annual audits, - Strict AML/KYC compliance and oversight split between federal and state regulators.
The GENIUS Act aims to safeguard dollar dominance and bring clarity to digital finance.
Bitcoin Outlook: Analyst Perspectives
Market experts are divided on the bill’s impact on cryptocurrencies. The GENIUS Act is seen as reinforcing regulatory frameworks that bolster confidence in the dollar and traditional financial systems. By imposing stricter rules on stablecoins, the bill could reduce crypto market volatility and systemic risks linked to unbacked digital assets. However, some worry that it may cripple stablecoin issuers and make them uncompetitive against 'legacy system products'.
The substantial addition to the national deficit raises concerns about sustained inflation, which could increase demand for Bitcoin as a 'digital gold'. Historical data shows that increases in the US debt ceiling do not consistently lead to Bitcoin price gains, suggesting that markets may have already priced these developments.
Brief Market Perspective on Cryptocurrencies
Unfortunately, the bill passed without any crypto tax relief or comprehensive reforms, despite strong lobbying efforts. This leaves ongoing tax complexity and uncertainty for crypto users. The expanding deficit could push interest rates higher, making riskier assets like cryptocurrencies less attractive. Although the bill does not directly regulate cryptocurrencies, upcoming sessions in Congress could lead to further legislative changes that shape the regulatory landscape. Thus, crypto markets may experience short-term boosts from tax incentives and inflation fears but may also face headwinds from fiscal concerns and potential tightening regulations.
In light of the passage of the 'One Big Beautiful Bill' and its implications for cryptocurrencies, it is essential to monitor future legislative developments and market adaptations to the new conditions.
