We will soon discover Biden’s 2024 budget plan. It may come as a surprise to a large number of crypto traders and investors. Joe Biden is indeed proposing a doubling of capital gains as well as a crackdown on crypto wash trading.
The outline of Biden’s 2024 budget plan
Barring any last-minute changes, Biden’s 2024 budget plan will be released this March 9. To protect himself from a possible recession, the current President of the United States has set himself a specific objective: to reduce the deficit by almost 3,000 billion dollars over the next ten years.
According to wall street journal, Biden’s 2024 budget plan will greatly affect the crypto market (and especially crypto investors). In order to raise around $24 billion for example, Biden plans to change the crypto tax treatment. Concretely, he will submit proposals aimed at suppressing the collection of tax losses. We will then speak of the sale of securities at a loss to offset the tax on capital gains. Traders use this practice to sell assets at a loss for tax purposes before buying them back immediately afterwards.
According Bloomberg, the plan also includes the doubling of the capital gains tax rate. This basically concerns crypto investors with at least $1 million in earnings. They will have to pay 39.6% on long-term investments.
Tax and Crypto Loss Harvesting Strategy
Under current wash sale rules, the strategy of tax loss harvesting is not permitted when stocks and bonds are involved. And to the extent that cryptocurrencies are not considered securities (according to current crypto regulations), they are therefore not affected by this prohibition on the collection of tax losses.
Biden’s 2024 budget plan has an entirely different goal, however. Everything seems to predict an imminent change in the status of cryptocurrencies. To be continued…
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