Fed Paper Suggests Taxation or Prohibition of Bitcoin as Solutions for Government Deficits

The Federal Reserve Bank of Minneapolis has released a research paper suggesting that Bitcoin may need to be taxed or banned in order to help governments manage deficits. The paper argues that Bitcoin complicates efforts to maintain permanent government deficits, and proposes that either a tax on Bitcoin or an outright legal prohibition would be necessary to counter this effect. The paper has drawn criticism from Bitcoin advocates, who argue that it fails to address the broader context of monetary inflation. The European Central Bank (ECB) has also called for regulating or banning Bitcoin, citing concerns over wealth redistribution. Critics argue that the paper’s claims ignore the inflationary pressures that Bitcoin was designed to counteract.