The next budget proposal from U.S. President Joe Biden contains a few surprises for cryptocurrency investors and traders. One of the proposals is to double certain investors’ capital gains and to crack down on cryptocurrency “wash” sales.
According to The Wall Street Journal, these recommendations call for abolishing the tax-loss harvesting method, in which a trader sells assets at a loss for financial reasons and then immediately acquires them back.
Under the present wash sale regulations, such a tactic is not allowed when stocks and bonds are involved. Cryptocurrencies, however, are not currently governed by these same laws because they are not considered securities. Adding that the American government wants to change that.
Biden proposal impacts on crypto
On March 9, the Biden administration is expected to present its fiscal 2024 budget proposal, which is said to be aimed to reduce the deficit by approximately $3 trillion over the following ten years. According to press reports, it also changes how digital assets are taxed with a goal of raising about $24 billion.
Also, the Biden budget suggests nearly tripling the capital gains tax rate for those earning at least $1 million from 20% to 39.6% on long-term investments. According to Bloomberg, it also intends to increase the income taxes paid by corporations and affluent Citizens. in 2021; market peaks are suffering from heavy losses.