The measure is anticipated to avoid wash trading and generate $24 billion.
According to the Wall Street Journal, the president will propose revising crypto taxation regulations to combat wash trading. While restrictions prohibiting wash trading apply to trading stocks and bonds, they are not yet used to trading cryptocurrencies.
This implies that investors may sell some shares and take a tax-deductible loss before reinvesting, an unlawful activity the government will seek to stop.
The new cryptocurrency tax policy is anticipated to generate $24 billion. It will be included in Biden’s larger budget proposal for 2024, which seeks to reduce federal budget deficits by $3 trillion over a decade. Due to resistance from the Republican party, which presently has a majority in the House despite Biden’s Democratic leadership and a Democratic Senate, the idea may fail.
On Thursday, March 9, Biden is slated to reveal the revised budget blueprint. Although Biden’s proposed reforms are not sure to be implemented, several other recent tax policy changes will impact crypto investors in the United States throughout tax season.
In February, the IRS broadened the scope of crypto tax regulations. Individuals who have interacted with digital assets must register their activity.
Some studies indicate that non-fungible tokens (NFTs) may be subject to taxation. In addition, cryptocurrency exchanges started sending 1099-B forms to their customers in 2022, allowing crypto investors to give the IRS additional information.
Recent third-party polls conducted by CoinLedger indicate that many crypto investors have neglected to record cryptocurrency transactions on their tax returns when required. In 2022, just 58% of respondents questioned said they would include cryptocurrencies on their tax returns.