Speculation rages over Trump’s alleged willingness to eliminate capital gains tax implications for bitcoin investors.
President Donald Trump made several successful connections with the bitcoiner community across the U.S. these past months. For instance, in September 2024 the then candidate picked up a large meal tab using bitcoin at PubKey, a bitcoin bar in New York City’s Greenwich Village.
“… Trump paid for patrons’ food and drinks with Bitcoin, a transaction he described as ‘very easy. It goes quickly and beautifully,’” Newsweek reported.
Unconfirmed reports followed in October, one posted by TFTC on X, stating that Trump was additionally calling for no taxes on bitcoin, indicating to its readers that Trump had said
“Bitcoin is money… why pay capital gains tax just to buy a coffee?”
This was probably in reference to a now-deleted post from tech giant Michael Saylor, which seemed to affirm this idea. Some speculate that Saylor perhaps only “tagged” Trump as someone familiar with, or being invited to, the conversation; some believe the post itself is fake.
No major media outlets or first-hand witnesses have confirmed that Trump ever said or engaged with any of this.
But existing somewhere between the diehard self-custodying bitcoin maxi crowd and say, Coinbase users, lies a realm of bit-curious investors who have taken special note of the rumors.
These ones have “gotten off zero” by allocating their dollars into bitcoin via U.S. individual retirement accounts (IRAs and Roth IRAs).
According to Investopedia, IRAs “… are retirement savings accounts with tax advantages …” which are managed professionally, and may invest in traditional funds of multiple stocks, or, as further below, be self-directed, offering
“… access to a broader selection of investments, including real estate and commodities.”
This is where bitcoin comes in. Those sold on bitcoin (as an investment) but not so much on their ability to self-custody – will often reach out to third-party services to help them manage their bitcoin allotments.
Investors accumulating large bitcoin holdings, and adding to their amounts regularly, will not typically leave such wealth on a public exchange.
Instead, U.S. investors often choose IRAs. Like recently popularized exchange-traded funds (ETFs), approved in the U.S. in January 2024, IRAs offer budding bitcoiners bitcoin dollar-price exposure, without ever literally owning and managing the asset.
(Think in terms of literally having to take possession of, then literally owning and managing, quantities of oil, gold, shrimp or wheat, etc., in order to profit from them. Hence the appeal of ETFs.)
These long-term investors also choose IRAs for a unique tax advantage which they offer — reducing or completely eliminating capital gains liability on their planned eventual “cashing out” of bitcoin into dollars — assuming for profit.
Bitcoin News reached out to various leaders in this industry to ascertain the possible impacts of potential tax-code changes, specifically asking:
- If Trump/Congress approve “no capital gains on bitcoin,” does that impact your business model, and if so how? Isn’t the selling point (of IRAs) to avoid capital gains taxes?
Eric Satz, the 2018 founder and CEO of AltoIRA, an administrator of a self-directed portfolio diversification firm offering “alternative investments and cryptocurrencies,” its website reads, responded for Bitcoin News readers
“No, I don’t think it interrupts our business model. Our average account size is 10x larger than the average retail account at the traditional exchanges and that’s because bitcoin is a long term investment, one that belongs in a retirement account.”
Conversely, Joe Kelly, 2016 co-founder and CEO of Unchained, which offers “access to (bitcoin) trading, inheritance, loans, and IRAs” according to its website, replied
“Yes, this would impact our tax-advantaged products – there’s no denying that. Evolution is part of business, and adapting to policy changes is simply part of operating in the financial sector.
“We believe what’s good for bitcoin is good for Unchained. Our core value hasn’t changed – we empower people to truly own their bitcoin through collaborative custody, and as bitcoin grows more mainstream, that need only becomes more critical.”
- What do you think the odds of “no capital gains on bitcoin” happening are?
Satz wasn’t optimistic, saying “Due to the administration’s current efforts to pay down debt and balance the budget, I think the odds are low that Congress would approve the elimination of capital gains on bitcoin.”
Kelly provided the more broad answer this time, typing “We try not to speculate on legislative outcomes – anyone who’s spent time in Washington knows how unpredictable these processes can be. Our focus remains on what we do best: helping our clients secure and manage their bitcoin through collaborative custody, regardless of the regulatory environment.”
Hopium
Adding to the overall confusion, one X user, {Matt} XRPatriot, erroneously posted to his over 125,000 followers
“BREAKING: President Trump has just signed an executive order removing ALL capital gains tax on US based cryptocurrency’s (sic).”
However, according to Grok AI, a link (now also deleted) published by Full Fact addressed this claim in “Full Fact Fact-Check on Trump’s Executive Orders,” saying
“President Donald Trump did not sign an executive order removing all capital gains tax on US-based cryptocurrencies.
“Despite signing roughly 200 executive actions on his first day, Trump could not—and did not—eliminate crypto capital gains taxes, as Article I, Section 8 of the U.S. Constitution exclusively vests the ‘Power To lay and collect Taxes’ in Congress.“
XRPatriot’s reportedly erroneous quote received over 500 reposts.
Additional disclosure: This author has maintained a bitcoin Roth IRA account with AltoIRA since 2020, information which could affect the integrity of this piece.
However (!) it also affords a bonus question, directed only to Alto’s Eric Satz:
- If no cap gains on bitcoin passes, and I, as an Alto customer, want to take dollar profits (Ed: as soon as the law changes, if), would there be a penalty?
Satz replied, “There would only be a tax consequence if you took an early distribution, which has nothing to do with gains and only with your age!”
Such tax-advantaged programs usually incur penalties if withdrawn before age 59 ½.
I took Satz’s reply to mean that, if somehow, despite current statistics, bitcoin’s price were allegedly impossibly negative after years of me saving for retirement, a premature withdrawal at my current age would indeed incur a tax penalty, in addition to the capital loss.
As a wise whiskey drinker once said, “I AM HODLING.”
