U.S. President Joe Biden’s latest budget proposal, unveiled on Monday, introduced a series of measures targeting the cryptocurrency sector that the administration suggests could generate substantial revenue for the government.
Central to the proposal are plans to apply wash sale rules to digital assets, impose an excise tax on crypto mining, and enforce stricter reporting requirements for financial institutions and digital asset brokers.
The proposal aims to extend existing financial regulations to the digital asset space, including foreign crypto account reporting and incorporating cryptocurrencies into mark-to-market rules. These measures are expected to generate nearly $10 billion in 2025 and exceed $42 billion over the next decade in tax revenues.
Tax reforms and revenue projections
Specifically, the budget suggests that including digital asset transactions under wash sale rules could raise over $1 billion in the 2025 fiscal year alone, with cryptocurrencies’ inclusion in mark-to-market rules potentially generating more than $8 billion by the same year. Together, these two initiatives are projected to contribute $32.3 billion to federal revenues over a ten-year period.
Additionally, an excise tax on crypto mining is projected to decrease the national deficit by about $7 billion over the next decade. This isn’t the first time the Biden administration has proposed such measures; similar tax provisions were included in last year’s budget proposal but were not enacted by Congress.
These proposed regulations are part of the effort by the Biden administration to close tax loopholes and increase tax revenues from the wealthy and large corporations. The budget also targets the “like-kind exchange loophole,” abuses of tax-preferred retirement incentives, and a tax break for corporate jets, among other measures, to ensure a fairer tax system.
