According to a report from the Wall Street Journal, the President of the United States, Joe Biden, is set to make huge changes to the US crypto tax rate with his new budget proposal. From what credible sources are saying, the new proposal is intended to raise about $24 billion from the changes made to the crypto tax in USA. The major target of the new budget proposal is against wash trading. The Biden administration will try to prevent wash trading from raising money through crypto taxation.
Crypto taxation is something that is an already existing phenomenon in the United States, but the government of Joe Biden is trying to bring up new strategies which would help them raise more funds. With an increased US crypto tax rate and prevention of wash trading, the US government will trap more funds in their favor. The rules President Joe Biden plans to implement will not only affect the crypto industry. The US stock markets will also be affected as they would try to block wash trading both on the crypto and stock market.
Before the crypto market was included in the new rule, many traders in the crypto market got away with wash trading. Wash trading was already illegal on the stock market before the crypto market. Before the rule applied to the crypto industry, traders could make investments and accept a tax-deductible loss before reinvesting.
What Does it Mean for the US Government And Crypto Traders?
According to many projections, the new crypto tax policy is projected to raise $24 billion for the Biden government, which is quite huge. The Biden administration also plans to cut federal budget deficits by $3 trillion over a decade. With the new proposal President Biden is making, it seems he is making headway with his plans.
But there seems to be another problem with this new crypto tax policy. The proposal which Joe Biden is making might be rejected by the Republican Party, which currently has a House majority.
Joe Biden is expected to release the budget plan today, 9th March 2023. Apart from the changes the Biden administration might make today, other crypto policies will seriously affect the US crypto tax rate. The IRS made new changes to some crypto tax policies, and it would make crypto investors pay more taxes than before.
According to the new tax rules from the IRS, those dealing with digital assets, which include cryptocurrencies, must now report their activities. According to their report, it said the people affected by the new rules are those who "At any time during 2022, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, gift or otherwise dispose of a digital asset (or a financial interest in a digital asset)?"
From the new rules the IRS made, one could see that they changed the classification for cryptocurrencies from virtual assets to digital assets. Also, new reports suggest that NFTs will become taxable with the new rules. There are very different tax rules for crypto investors in 2023. Joe Biden's proposal today might add up to the already existing crypto tax rules.