Key Takeaways

• President Biden calls for ending $18 billion ‘tax loopholes’
• Crypto is already taxed
• Politicians and crypto stakeholders take a stance against Biden’s crypto tax

It’s almost time for US presidential election, i.e., the time when politicians start pointing fingers at opposing parties and making claims that include dollar figures in the billions. It’s also a great time for voters who like to hear statements such as “Tax the wealthy!”

On Wednesday, June 28, 46th US President Joseph Biden took the podium to address the people with a speech that mainly focused on imposing higher taxes on the rich, including crypto traders. While it wasn’t Biden’s first time to address taxing crypto traders, the backlash only got more fierce, demanding clarification.

Biden Crypto Tax Plans

President Biden took the White House podium  to discuss his new ideas for improving the federal tax system, fixing the issue with wealthy individuals paying lower percentages in taxes compared to the average Joe. 

After Biden took the time to highlight his cabinet’s achievements throughout his term, the president brought the discussion to focus on increasing taxes that rich individuals should pay, among which are crypto traders.

“For example, does anyone here think the federal tax system is fair?  Raise your hand.  No matter how much money you make.  We’re going to make it fair by eliminating loopholes for crypto traders, hedge fund managers.”

And, that wasn’t the first time the president addressed taxing crypto traders. Back in May, President Biden tweeted  that the system allows for “Tax Loopholes That Help Wealthy Crypto Investors ($18 billion)”. 

The social media platform itself placed a note under the President’s tweet, stating that “Virtual currency is treated as property and general tax principles applicable to property transactions apply to transactions using virtual currency.

When investors sell virtual currency they must pay tax on any capital gain.

There is no evidence of “Loopholes” to avoid this,” while linking a page on the IRS website to provide proof.

Crypto enthusiasts did not take kindly to the President’s claim. Billy Markus, co-founder of DogeCoin, responded by saying, [sic] “you also realize most american crypto users aren’t rich, but are using crypto cuz they don’t feel like they have enough to make ends meet – because of you guys?”

A crypto research who goes by @FatManTerra also stated that “In 2022, total corporate profits in the US stood at 11.8 trillion USD. In the same time period, the total cryptocurrency market shrank by 1.4 trillion USD.”

On top of that, politicians from the opposite side of the aisle expressed their dismay at Biden’s crypto tax proposal. Senator Cynthia Lummis tweeted “I will not let President Biden tax the digital asset industry out of existence.”

Senator Robert F. Kennedy Jr, also a presidential hopeful running for the Democratic nomination, also chimed in, saying “It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere. Biden’s proposed 30% tax on cryptocurrency mining is a bad idea.”

Biden’s Crypto Tax Proposal

In 2021, President Biden proposed the Build Back Better Act  which focused on improvements to taxing and spending by the federal government. Among the many proposals is subjecting cryptocurrencies to “wash sales tax”.

Wash sales is the process of selling an asset at a loss and then purchasing it once more for a cheaper price. Cryptocurrencies are not currently subject to this form of taxation as the US government does not recognize digital assets as a typical form of asset.

A reflection of the proposed policy can be seen in Biden’s 2024 US budget proposal  under “Apply the wash sale rules to digital assets and address related party transactions.” 

Whether the House will approve the bill is yet to be determined. However, both crypto stakeholders and members of the house have expressed their disapproval of the rule as it impacts individuals who mostly do not fall under the category of “wealthy”.