Biden Budget Targets Cryptocurrencies for Higher Returns

On Monday, President Joe Biden unveiled a budget proposal containing eye-catching measures targeting the cryptocurrency sector. The Administration believes that this action could generate significant government revenue. At the core of the proposal are plans to apply wash sale rules to digital assets, add an excise tax on cryptocurrency mining, and strengthen reporting requirements for digital currency transactions.

Additionally, the proposal seeks to bring cryptocurrencies within the scope of existing financial regulations. This includes reporting on foreign cryptocurrency accounts and applying market valuation rules for digital currencies. The administration projects these measures will generate nearly $10 billion in revenue in 2025. They expect these plans to generate more than $42 billion in tax revenue over the next 10 years.

Tax Reform and Revenue Forecasts

The budget proposal outlines certain tax reforms that are important for digital asset trading. For example, applying wash sale rules to cryptocurrencies could generate over $1 billion in revenue in fiscal year 2025. Additionally, including cryptocurrencies in the mark-to-market rules could generate more than $8 billion in revenue in the same year. Combined, these efforts are expected to increase federal revenues by $32.3 billion over 10 years.

Moreover, the proposed excise tax on cryptocurrency mining could reduce the national deficit by approximately $7 billion over the next decade. It’s worth noting that this isn’t an entirely new idea. The Biden administration proposed a similar tax measure in last year’s budget, but Congress failed to pass it.

The broader goal of these proposals is to close tax loopholes and increase revenue for the wealthy and large corporations. The budget also targets other areas for reform. These include the “like-exchange loophole,” misuse of tax-advantaged retirement incentives, and tax breaks for corporate jets. The goal is to create a fairer tax system for everyone.

In summary, the Biden administration’s latest budget proposal puts a spotlight on the cryptocurrency sector. Through a variety of measures, we seek to leverage the digital economy to increase tax revenues with the goal of fairness and fiscal responsibility.

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