The Federal Reserve report suggests taxing Bitcoin or implementing a ban to address the government deficit, drawing criticism from industry insiders

The Federal Reserve Bank of Minneapolis in the United States recently released a new research report expressing concerns about the impact of Bitcoin on government fiscal policy, suggesting that it may need to be taxed or legally prohibited to help governments manage deficits. The paper argues that Bitcoin complicates efforts to maintain permanent government deficits, especially in an economy reliant on nominal debt. It points out that Bitcoin has created a so-called "balanced budget trap," forcing governments to balance their budgets. This paper has been sharply criticized by Bitcoin supporters. Matthew Sigel, head of digital asset research at VanEck, said that the Federal Reserve Bank of Minneapolis now aligns with the European Central Bank (ECB) in its criticism of Bitcoin. He pointed out that this document envisages legal bans and additional taxes on bitcoin to ensure government debt remains the only "risk-free" security. Dan McArdle, co-founder of Messari particularly noted a 1996 paper published by the bank titled "Money is Memory", which describes money as a fixed supply object not entering production - a concept closely related to Bitcoin's design.