The shock wave of the US “remittance tax”: US stocks are under pressure, will Bitcoin usher in new opportunities?
/Zhang Wuji wepoets
The Americans have come up with a new trick! On May 16, a new bill proposed by Republicans in the U.S. Congress plans to impose a 5% tax on all remittances from non-citizens to overseas, which will affect H-1B, F-1 visa holders and green card holders. In addition, the bill requires that any after-tax income earned by foreigners from stock options in the United States, when transferred overseas, will also be subject to a 5% tax.
1. Analysis of taxation policy: Who will be "targeted"?
It is understood that according to the bill, starting from 2025, non-US citizens (including H-1B, F-1 visa holders, green card holders and non-resident aliens) will need to pay a 5% consumption tax when remitting money overseas. Exemptions are limited to US citizens and nationals whose identities have been verified by "qualified remittance service providers."
Wide coverage : involving after-tax income such as stock option income (such as RSU restricted shares), salary remittances, investment fund transfers, etc.;
Strict enforcement mechanism : remittance service providers are required to withhold taxes and pay them to the Treasury Department. If they evade taxes, they will bear "secondary liability", and there are "anti-transit rules" to prevent the use of US citizenship to avoid taxes;
Economic chain reaction : Taking India as an example, American immigrants sent more than 23 billion U.S. dollars to their home country in 2023. After the tax is imposed, a single remittance of 1,000 U.S. dollars will lose 50 U.S. dollars, or force the remitter to bear additional costs.
Critics say the policy discriminates against legal immigrants, could increase the use of informal remittance channels and make the United States less attractive to international skilled talent.
2. Impact on US stocks: Technology stocks may be the first to be affected
Rising labor costs : Silicon Valley and other technology companies rely on H-1B visa employees. If companies need to increase wages to compensate for the remittance tax burden, it will directly squeeze profit margins. According to tax experts, employers' salary costs may increase by 3%-5%;
Profits of multinational companies are damaged : Indian executives generally hold RSU stock options, and their willingness to allocate overseas assets decreases after the tax, which may affect the effectiveness of corporate equity incentives;
Market sentiment fluctuations : Policy uncertainty may cause short-term fluctuations in the technology sector, especially in the semiconductor and artificial intelligence fields that rely on foreign employees.
U.S. stock investors can focus on companies with a high proportion of local labor, or plan ahead to use automation technology to replace manual labor.
3. Bitcoin’s “unexpected bonus”: spillover of remittance demand
The bill does not cover peer-to-peer cryptocurrency transfers , creating a structural opportunity for Bitcoin and Ethereum:
Demand for alternative remittances surges : The 5% tax rate on traditional channels may drive immigrants to turn to Bitcoin for cross-border payments. World Bank data shows that global remittances will reach $818 billion in 2023. If 10% of the demand turns to cryptocurrencies, it will bring in more than $40 billion in incremental funds;
Regulatory arbitrage space : The bill clarifies that “qualified remittance service providers” must cooperate with the Ministry of Finance to verify their identities, but self-hosted wallets (such as MetaMask) do not need to report transactions, so users can avoid tax tracking
Risk Warning : If the US government subsequently includes cryptocurrencies in the scope of taxation, it may trigger short-term selling pressure, but the current bill has established the tone of "crypto exemption".
4. Cryptocurrency traders’ coping strategies: using options to hedge against volatility
1. Protective put option (hedging against downside risk)
Hold Bitcoin spot and buy put options at the same time. For example, if the current BTC price is $100,000, buy a put option with an exercise price of $98,000 in one month (the premium is about 5%).
If the tightening policy causes the currency price to fall to $95,000, the option profit can offset part of the loss; if it rises, only the premium will be lost.
2. Straddle (betting on rising volatility)
Buy call and put options with the same expiration date (same strike price) at the same time. For example, if the current price of BTC is $100,000, buy 102,000 call options and 98,000 put options.
If the policy causes the currency price to fluctuate drastically (breaking through 102,000 or falling below 98,000), unilateral profits can cover bilateral costs.
3. Calendar Spreads (Capturing Time Value Decay)
Sell near-month at-the-money call options and buy far-month out-of-the-money call options. Applicable to scenarios where medium- to long-term increases are expected after the release of short-term policy negatives.
In short, the new move by the Americans is a big event that is bad for the US stock market and good for the cryptocurrency market. The US remittance tax policy has a short-term impact on the immigrant economy and the US technology sector, but it has created a "regulatory arbitrage window" for Bitcoin. Ordinary investors need to be wary of the subsequent evolution of policies and use options tools to balance risks. The high volatility of the crypto market is both a challenge and provides space for excess returns for flexible strategies.
