Following major sell-offs in cryptocurrency markets amid reports of United States President Joe Biden's capital gains tax rise proposal last week, the Biden administration defended nearly doubling tax levies for only the “very, very richest.”

A senior Biden administration official claimed that only 0.3% of taxpayers in the U.S. would be affected by higher levies on their investments under the new capital tax plan.

“There’s increasing evidence that over recent years in fact many, many of the returns at the very top are what they call above-market rates of return, rents and so on. Taxing the people who are doing extremely well in the economy is one way of asking somewhat more from that,” the Biden administration official said in a Monday interview with the Financial Times.

Under Biden’s plan, the capital gains tax rate for wealthy individuals will rise to 39.6% from the current base rate of 20%. For those earning $1 million or more, the new top rate will be accompanied by an existing surtax, bringing the U.S. capital gains and dividends tax rate to 43.4%.

The Biden administration official noted that the new plan is consistent with Biden’s campaign stance, “which was that we needed to fundamentally reform parts of the code that affect the very, very richest or very highest income Americans.”

Both crypto markets and U.S. stocks experienced major sell-offs following Biden’s proposal amid growing speculation and FUD — feat, uncertainty and doubt — that investors would sell shares before the higher tax rate is adopted. Bitcoin (BTC) faced heavy selling pressure, leading to its price dropping below the $50,000 support level on Friday, touching a low of $47,500. The U.S. stock market also saw major losses Thursday before quickly bouncing back.

Some investors, including billionaire venture capitalist Tim Draper, criticized the new tax plan. A prominent crypto advocate, Draper argued that a 43.4% capital gains tax “might kill the golden goose that is America,” with California taxes potentially landing at 56.4%, which “spells death to job creation.” According to the investor, Bitcoin could potentially become a haven for concerned investors. “The antidote for oppressive government and runaway taxes is....Bitcoin,” Draper wrote in a tweet Thursday.

Graham Newhall, the communications advisor at the Blockchain Association, told Cointelegraph that the organization supports the perspective that a rate of 28% would be the revenue-maximizing level, as per the Congressional Budget Office. “Any higher than that and it may force investors to hold their assets longer than they might have planned,” he noted, stating:

“On the other hand, crypto is full of hodlers, and those folks already have a very long term perspective on crypto investments, so they may not be swayed to sell, even by a markedly higher rate.”

Brett Cotler, an attorney in taxation and blockchain practices at law firm Seward & Kissel, suggested that certain types of crypto-related income might not be affected by the proposed capital gains rise at all. “Many crypto traders trade with such high frequency or turnover that a predominant portion of their trading gains are short-term capital gains, taxed at the higher ordinary income tax rates. Any change in capital gains taxation should not affect these activities,” he noted.

However, crypto investors that hold for over one year and who would be subject to the higher capital gains tax rates could be affected, Cotler said. The attorney suggested that there are many ways that taxpayers can mitigate their capital gains tax including crypto investment through tax advantaged accounts like retirement accounts, health savings accounts and others. Founders of startups could also benefit by structuring their businesses as “qualified small business corporations”, Cotler stated.