Future budget proposals from U.S. President Joe Biden include a planned doubling of capital gains for specific investors and a crackdown on cryptocurrency “wash sales,” which will come as a surprise to cryptocurrency traders and investors.
On March 9, the Biden administration is scheduled to present its proposed budget for fiscal year 2024. Which is expected to strive to cut the deficit by almost $3 trillion over the following ten years. According to news sources, it also includes adjustments to the tax treatment of cryptocurrencies with a goal of raising about $24 billion.
According to The Wall Street Journal, one of these proposals calls for an end to tax-loss harvesting. A practice whereby a cryptocurrency trader sells assets at a loss for tax reasons before buying them back right away.
Under the present wash sale regulations, such a strategy is not allowed when stocks and bonds are involved. Cryptocurrencies, however, are not presently governed by these same laws because they are not considered securities.
The American administration now seems to be trying to change that.
Danny Talwar of the Koinly cryptocurrency tax software company commented:
“This is an inescapable thought for the U.S., which, whenever executed, will see it comparable to different purviews like Canada and Australia, where crypto wash seals apply.”
He went on, “If the rule is followed, the timing is important as many cryptocurrency holders. Who participated in the industry following the market tops of 2021 have suffered from severe losses.