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Rumors about potential tax cuts or complete removal of taxes on crypto capital gains are circulating, fueled by the buzz surrounding US President-elect Donald Trump’s official memecoin, Official Trump (TRUMP).
The Solana-based token has flipped major memecoins like Pepe (PEPE), Shiba Inu (SHIB) and Dogecoin (DOGE), achieving a fully diluted valuation (FDV) of $71 billion, according to CoinGecko. TRUMP is now the 15th-largest cryptocurrency by market cap, reaching it in under 48 hours.
Currently, cryptocurrency in the US is taxed as property, meaning any sale, trade or disposal of crypto is subject to capital gains tax.
Short-term capital gains for assets held less than a year are taxed at rates ranging from 10% to 37%, depending on the individual’s income. Based on income levels, long-term capital gains for assets held over a year are taxed at 0% and 20%.
Speculation over crypto tax plans
Investors, crypto founders and community members believe that the success of the TRUMP token could potentially influence tax reforms.
“Now that 80% of Trump’s wealth suddenly consists of crypto, you can expect an end to all federal income taxes on crypto sales within the year. This is how the game is played,” wrote Mike Alfred, a crypto investor and founder of Alpine Fox LP.
Pseudonymous trader Gammichan shared similar thoughts about Trump’s potential financial motivations.
Source: Gammichan
Custodia Bank’s CEO, Caitlin Long, suggested that Trump’s crypto ventures could influence US tax policy.
“Trump now has a real incentive to change crypto taxation in the US. A US president-elect meme-coining during inauguration weekend was not on my bingo card,” she said.
Related: How did Donald Trump deal with crypto during his first term?
TRUMP token’s meteoric rise
Launched on Jan. 17, just days before Trump’s inauguration, the TRUMP token has captured the crypto community’s attention. The token surged 610% overnight from Friday into Saturday, trading at $68 at the time of writing.
“Because of the TRUMP launch, which just hit $72 billion FDV, it siphoned away all the liquidity from existing alts and into TRUMP, SOL, and some others,” said Daan Crypto, a pseudonymous trader on X. “This is simply because people sell their coins to buy TRUMP. There’s not enough liquidity in such a short time span, especially during a weekend.”
Over 80% of TRUMP’s supply is held by CIC Digital, an affiliate of the Trump Organization, and Fight Fight Fight, a co-owned entity. These holdings are locked in a three-year unlocking schedule, preventing their immediate sale.
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