A recent paper by the Federal Reserve Bank of Minneapolis suggests that assets like Bitcoin may need to be taxed or banned for governments to sustain ongoing budget deficits. The study, published on Oct. 17, argues that Bitcoin creates challenges for policy implementation in economies where governments rely on permanent deficits funded by nominal debt. The report describes Bitcoin as contributing to a “balanced budget trap,” a situation where the government is forced to balance its budget. The researchers used Bitcoin as an example of a fixed-supply private asset that lacks real resource claims. To resolve this issue, they proposed
