UpdatesMar 10, 2023

Joe Biden intends to double taxes for cryptocurrency investors

The administration of the President of the United States hits cryptocurrency investors.

The President of the United States - Joe Biden - announced the publication of a new budget proposal for 2024. The latest reports show that it contains several issues that traders and investors from the cryptocurrency sector will not quite like.

Controversial proposal of the US government

On March 9, the administration of US President Joe Biden is due to present its 2024 budget plan. The overriding goal is supposedly to reduce the budget deficit by almost $ 3 trillion.

According to the Wall Street Journal, one of the strategies to reduce losses in the budget is to gain from taxes on cryptocurrency trading. The US government intends to raise approximately $24 billion, which will come from taxes on digital currency trading.

The authorities reportedly intend to stop allowing a strategy whereby traders dispose of their assets at a loss over tax matters, known as tax loss collecting, before then buying them back.

Such practices are not allowed in the US for stocks and bonds under the current wash sale rules. So far, however, cryptocurrency assets have not been subject to these regulations. This is because the US government does not officially recognize these types of assets as securities.

Reports on the Biden administration's plans were commented on by Danny Talwar of Koinly, which provides cryptocurrency tax software:

“This is an inevitable issue for the United States. If the new regulations are implemented, the same will happen in other jurisdictions such as Canada and Australia, comments Talwar.

The entrepreneur also added that the new regulations come into force at a rather unfavorable time for investors in the digital currency industry. Because those people who entered the cryptocurrency asset sector in 2021 are currently recording very large losses.

This is not the end of the bad news. Biden's proposal also doubles the capital gains tax rate for investors who make a profit of at least $1 million.

Such entities would have to pay a tax of 39.6%. This is doubling the rate compared to the current tax burden, which is 20%.