Venezuelan authorities have authorized new tax rules applicable to any financial transaction or service paid with cryptocurrencies. According to the nation’s legislature, this new tax law will strengthen the nation’s currency.
The Tax And The Dwindling Value Of The Venezuelan Bolivar
An official announcement by the government, one of the reasons for implementing this new tax policy is that the Venezuelan Bolivar is gradually losing its worth as the popularity of digital currencies grows. Part of the announcement further states that any individual or institution utilizing digital currencies for financial transactions or payment of services or products will be charged 20% tax.
However, most crypto analysts have opined that the authorities’ new law discourages using digital currencies and facilitates wider use of the Bolivar and the national digital currency. Popular local economist, Jose Guerra, further stated that the authorities’ new policy would negatively impact those who save or earn their income in USD.
More Reactions To The New Tax Policy
Guerra further stated that “the authorities have enacted a law that helps it to earn more at the expense of those who save or earn their income in USD because it is aware that nearly 70% of transactions in the country are domiciled in the USD.”
He also said, “many Venezuelans have taken to earning in foreign currencies (including cryptocurrencies), which has helped them solve most of the cash flow problems and made their savings more worthwhile. Hence, this new policy is an attempt at promoting one payment method over another one.” Statistics show that the Bolivar has lost 65% of its value in the past 12 months as the country remains embroiled in deep economic turmoil – its highest in ten years.
Late last year, the Maiquetta international airport management stated that travelers can now pay for their tickets using digital currencies (specifically, BTC and DASH), Petro (the state’s virtual asset), and the Bolivar. Hence, it is no wonder that the government is leveraging crypto assets’ utilization to increase its tax revenues.
The Crypto Market Rebounds
This past weekend, the crypto market made its highest uptrend in nearly 14 days. The bullish move caused the overall market evaluation to hit the $2 Tr. Mark, a first since January 21st. The top and mid-tier coins followed BTC’s gain of 15.5% within six days.
The king altcoin (Ethereum) surged past the $3K psychological barrier during this period, while meme tokens SHIB and DOGE made an appreciable 32% and 14% gains, respectively, within the period mentioned above. While many BTC traders were excited that BTC surged past the $40K level this past weekend, on-chain crypto analytics observed the outflow of huge BTC amounts from the exchanges.
A Glassnode data estimated that about $810m worth of BTC flowed out of exchanges during this period. The current bullishness confirms the derivatives indicator’s forecast, which predicted that investors’ confidence in the crypto market is gradually returning. However, the indicator warned that a price correction might happen soon.
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