US President Joe Biden is expected to release a new budget plan on March 9, proposing changes to crypto taxation
The new crypto tax policy is projected to raise $24 billion, targeting wash trading in cryptocurrencies.
Reports have suggested that Non-fungible tokens could be taxable and anyone who has dealt with digital assets must report their activities to the IRS.
US President Joe Biden is set to unveil the new budget plan on Thursday, March 9. Reports have suggested that crypto market participants can expect changes to crypto taxation, targeted towards wash trading and taxing collectibles, digital art.
US President Joe Biden is set to target wash trading and this plan could directly affect crypto trading. According to a Wall Street Journal report President Biden will propose changes to crypto taxation rules. Currently, rules against wash trading apply to stock and bond trading, those rules are not being applied to crypto trading.
As of now investors can sell certain investments and accept a tax-deductible loss before reinvesting. This is considered an illegal practice in stocks and bond trading and the government wants to prevent it in crypto trading as well.
The new crypto tax policy could raise $24 billion as part of Biden’s broader 2024 budget plan. There is a likelihood that Biden’s proposal gets opposed by the Republican party.
Tax policy changes that affect crypto investors in the US
While Biden’s changes are not guaranteed to come into effect, the Internal Revenue Service (IRS) recently expanded the scope of crypto tax rules in February 2023. These changes require anyone who has dealt in cryptocurrencies to report their activities.
Another report suggests that Non-fungible tokens (NFTs) could be taxed. According to a recent third-party survey by CoinLedger, only 58% of the survey participants have included cryptocurrency on their tax reports in 2022.
What traders and analysts think about Biden’s proposed crypto tax rules?
DivXMan, crypto trader and YouTuber is bullish on the updated crypto tax rules. The crypto trader believes the updated rules could incentivize holding Bitcoin in the long term.
This means if you buy a digital asset, it crashes, and you sell, then buy it or a similar asset/derivative within 61 days at equivalent value; you can’t claim a taxable loss on the sale. Overall this is a good thing. It incentivizes holding Bitcoin long term vs risky trading.
Nagato, a crypto trader and analyst, took the development with a grain of salt. The technical expert believes words like “propose” and “expect” matter less than action. Biden’s updated crypto tax rules could face rejection by the Republicans.
