Biden Wants to Double Capital Gains and Clamp Down on Crypto Wash Sales: Reports

The next budget plan from U.S. President Joe Biden has a few surprises for cryptocurrency traders and investors, such as a proposal to double capital gains for specific investors and to tighten down on crypto wash sales.

On March 9, the Biden administration is scheduled to present its fiscal 2024 budget proposal, which is said to be intended to cut the deficit by approximately $3 trillion over the following ten years. According to sources, plan also involves adjustments to how cryptocurrency is taxed with a goal of raising about $24 billion.

According to the WSJ, one of these recommendations calls for a stop to the tax-loss harvesting tactic, in which a cryptocurrency trader sells assets at a loss for accounting purposes before buying them again right afterwards. Under the present wash sale regulations, such a tactic is not permissible when stocks and bonds are involved. Cryptocurrencies, however, are not yet governed by these regulations because they have not been identified as securities.

Yet it looks like the US administration wants to change that. “This is an inescapable consideration for the US that, if enforced, will see it on level with other countries like Canada and Australia, where crypto wash sales apply,” said Danny Talwar of the cryptocurrency tax software company Koinly in a statement to Cointelegraph.

He said, “If the regulation is followed, the timing is critical since many cryptocurrency investors who joined the area during the market tops of 2021 are suffering from large losses.

Also, the Biden budget suggests almost 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 companies and affluent Citizens.