Crypto investors could be about to lose a big tax loophole as part of Biden's new budget proposal
- The Biden administration seeks a tax change on crypto transactions, The Wall Street Journal said.
- Currently, people can claim losses on sales of underwater crypto investments, then repurchase them.
President Joe Biden is reportedly targeting a tax loophole used by cryptocurrency investors as part of his 2024 budget proposal that's aimed at cutting country's deficit by trillions of dollars.
The Wall Street Journal reported that Biden will propose changing the tax treatment of cryptocurrency transactions. Current rules allow people to sell their underwater crypto investments, claim the loss on their taxes, then immediately buy them back.
The administration said such sales are not subject to the so-called wash-sale rule that applies to stocks and bonds, according to the report. The wash-sale rule prevents people from selling stocks and repurchasing them immediately for tax purposes.
Biden's 2024 budget proposal was slated for release on Thursday, and the president is targeting a cut of about $3 trillion to the US deficit in the next 10 years.
Changing the tax treatment of cryptocurrency transactions could raise $24 billion, according to the Journal.
The proposal comes after crypto prices tumbled last year amid the market's persistent "crypto winter." Bitcoin fell by more than 60% in 2022, and the broader crypto market's valuation fell below $1 trillion after reaching $3 trillion in 2021.
The market's been in recovery mode this year, with bitcoin's price up 30% year-to-date. The digital currency trading around $21,760 on Thursday.
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