Biden wants to double capital gains and clamp down on crypto wash sales: Reports

cointelegraph.com:

U.S. President Joe Biden’s upcoming budget proposal has a few surprises for crypto traders and investors, including a proposed doubling of capital gains for certain investors and a crackdown on crypto wash sales. 

The Biden administration is set to release its fiscal 2024 budget plan on Mar. 9 which is reportedly aimed at reducing the deficit by almost $3 trillion over the next decade. It also includes changes to crypto tax treatment with the aim of raising around $24 billion, according to reports.

One of these proposals includes an end to a strategy in which a crypto trader sells assets at a loss for tax purposes, known as tax-loss harvesting, before repurchasing them immediately after, according to the WSJ.

President Biden's 2024 budget plan will seek to save hundreds of billions of dollars by lowering drug prices and raising some business taxes https://t.co/oKDdy8h5cG

Such a strategy is not permitted when stocks and bonds are involved — under current wash sale rules — However, crypto is currently not under these same rules as digital assets have not been classified as securities.

However, it appears that the U.S. government is looking to change that.

Speaking to Cointelegraph, Danny Talwar, from crypto tax software firm Koinly commented:

“If the rule is applied, the timing is significant as many crypto holders who entered the crypto space on the back of 2021 market peaks are suffering from heavy losses,” he added.

Related: What is crypto tax-loss harvesting, and how does it work?

The Biden budget also proposes to nearly double the capital gains tax rate for investors making at least $1 million to pay 39.6% on long-term investments, up from the current 20% tax rate. It also plans to raise income levies on