Limit Cryptocurrency Laundering Sales, Increase Capital Gains Among Biden Budget Proposal: Report
The United States, which is set to receive its annual budget on Thursday, March 9, is expected to see some changes in which country law oversees the digital currency sector. US President Joe Biden may have focused on clamping down on cryptocurrency laundering sales. In addition, the speculative rules could also include the decision to amend the current tax treatment of cryptocurrency in the United States. Cryptocurrency culture seems to have gained traction in the US in recent years as retailers are increasingly warm to the idea of accepting payments in cryptocurrencies.
As part of the annual budget announcement, US authorities reportedly may propose ending the ‘tax loss harvesting’ strategy for cryptocurrency traders. This would prevent cryptocurrency holders from ‘laundering trade’ with their assets at a discount before immediately buying them back for tax purposes.
In the United States, cryptocurrency is identified as a property, not a currency. The US Internal Revenue Service (IRS) currently charges a tax of between 10 and 20 percent on crypto transactions in the USA.
Biden’s upcoming budget announcement could explore the idea of doubling the capital gains tax rate for investors. This could mean that long-term cryptocurrency holders with a portfolio of more than $1 million (roughly Rs. 8 crore) may be required to pay a higher tax of around 39.6 percent.
These changes regarding the handling of cryptocurrencies in the United States may cause tremors in the crypto sector in the following days. Under such speculation, the valuation of the cryptocurrency market plunged from its $1 trillion value on Thursday, with the majority of cryptocurrencies, including bitcoin and ether, recording the lowest prices in weeks.
The Bloomberg report claimed that the US government could end up increasing the income levied on wealthy US citizens as well as businesses.
Post-COVID-19, the US inflation rate is currently 6.41%, compared to 6.45% last month and 7.48% last year according to Ycharts.com. This is higher than the long-term average of 3.28 percent.
In order to bridge this fiscal imbalance, Biden could look to bring about $3 trillion (roughly Rs. 1,63,84,100 crores) through various policy reforms in the coming years. The Wall Street Journal said in a report that amending crypto tax laws could contribute more than $24 billion (roughly Rs. 1,96,700 crore) to the US economy.
The cryptocurrency industry in the United States is experiencing a boom. About 20 percent of the population in the United States currently owns cryptocurrency. A recent study by business intelligence firm Morning Consult claimed that the reason Americans invest in crypto assets is to challenge the financial inequality prevailing in the United States.