How US President Joe Biden’s plan for updated crypto tax affects cryptocurrency traders?

US President Joe Biden is set to unveil the new budget plan on Thursday, March 9. Reports have suggested that crypto market participants can expect changes to crypto taxation, targeted towards wash trading and taxing collectibles, digital art. 

Also read: India imposes AML legislation to crypto in a bid to increase regulatory oversight

US President Joe Biden could propose changes to crypto taxation in budget plan

US President Joe Biden is set to target wash trading and this plan could directly affect crypto trading. According to a Wall Street Journal report President Biden will propose changes to crypto taxation rules. Currently, rules against wash trading apply to stock and bond trading, those rules are not being applied to crypto trading. 

As of now investors can sell certain investments and accept a tax-deductible loss before reinvesting. This is considered an illegal practice in stocks and bond trading and the government wants to prevent it in crypto trading as well. 

The new crypto tax policy could raise $24 billion as part of Biden’s broader 2024 budget plan. There is a likelihood that Biden’s proposal gets opposed by the Republican party. 

Tax policy changes that affect crypto investors in the US

While Biden’s changes are not guaranteed to come into effect, the Internal Revenue Service (IRS) recently expanded the scope of crypto tax rules in February 2023. These changes require anyone who has dealt in cryptocurrencies to report their activities. 

Another report suggests that Non-fungible tokens (NFTs) could be taxed. According to a recent third-party survey by CoinLedger, only 58% of the survey participants have included cryptocurrency on their tax reports in 2022. 

What traders and analysts think about Biden’s proposed crypto tax rules?

Crypto Div @crypto_div, a crypto trader and YouTuber is bullish on the updated crypto tax rules. The crypto trader believes the updated rules could incentivize holding Bitcoin in the long term. The expert told FXStreet,

"I think the proposing changes to rule against wash trading is a smart move. This is normally done to show taxable losses where many investors intend to rebuy and continue to hold the asset. It’s also more frequently done by much wealthier and savvier investors than your normal retail investors. Even if this adds a minor amount of stability to markets I see it as win for retail and one of the few steps I’ve seen in the right direction for regulation."