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Bitcoin Price Breaks $72,850 as Joe Biden Targets Crypto With Potential Taxes

Published March 12, 2024 9:14 AM
Teuta Franjkovic
Published March 12, 2024 9:14 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Bitcoin reached its fourth all-time high in less than a week, and a second in 24 hours, on March 12 2024.
  • The news came as Joe Biden proposed applying wash sale rules and taxing crypto mining.
  • The US administration estimates these new taxes and regulations could generate billions within the next decade.
  • The White House suggested similar measures in last year’s budget but they were not implemented.

Bitcoin reached yet another all-time high, even as US President Joe Biden unveiled a range of proposals about crypto.

BTC is in a notable bullish phase, trading at a record $72,850.71 on March 12, buoyed by increased trading accessibility and a weaker dollar.

Meanwhile, Biden announced plans to reintroduce a wash trading rule, a tax on crypto mining, and other regulatory measures in his proposed budget  for the upcoming year.

The administration estimates these taxes could yield close to $10 billion in 2025 and exceed $42 billion over the next decade.

Bitcoin Soars Above $72,000, Market Cap Nears $2.7 Trillion

Bitcoin soared to a record high  of $72,850 on March 12.

The overall market capitalization of cryptocurrencies increased by 4.6% to approximately $2.72 trillion, with a 24-hour trading volume of $166 billion, marking a 41.3% rise. Stablecoins accounted for $149.9 billion, or 90.3%, of the total crypto market’s 24-hour volume, according to CoinMarketCap  data.

Bitcoin’s recent surge past $72,500 highlights its dominance in the market, supported by bullish technical signals. It faces resistance at $73,824, $76,749, and $79,904, but finds support at $67,154, $64,861, and $62,192, safeguarding against declines.

Although there is some evidence of overbuying, Bitcoin’s push beyond $70,000 suggests a continued upward movement. Indeed, the coin is aiming to reach over $73,800. The 50-day EMA, positioned at $66,860, further underscores the bullish outlook.

Biden’s Wash Sale Rules and Crypto Mining Tax Among Other Measures

The president’s budget proposal  for the next fiscal year, unveiled on Monday, outlines key initiatives targeting the cryptocurrency sector.

These include the application of wash sale rules to digital assets, mandatory information reporting for financial institutions and crypto brokers, foreign account reporting for crypto, the inclusion of crypto in mark-to-market taxation, and the introduction of an excise tax on cryptocurrency mining operations. Biden’s plans could end up being lucrative if the American Bitcoin mining sector continues to thrive.

The budget proposal outlines measures expected to save billions of dollars. They aim to eliminate tax loopholes that primarily target wealthy individuals and major corporations.

These measures  include

  • Ending the like-kind exchange loophole. This currently allows real estate investors to indefinitely defer taxes.
  • Rforming tax-preferred retirement incentives to prevent the ultra-wealthy from building tax-free wealth.
  • Stopping the exploitation of life insurance tax shelters by the super-wealthy.
  • Closing a loophole favoring affluent cryptocurrency investors, and discontinuing a tax break for corporate jets.

Wash Sale Rules Eyed for NFTs

The budget proposal  seeks to address a loophole exploited in the cryptocurrency market, particularly with non-fungible tokens (NFTs), by extending traditional market wash trading rules to crypto assets. Currently, unlike stock or bond investors, crypto investors can sell a cryptocurrency at a loss to claim a significant tax deduction and then repurchase the same cryptocurrency the next day.

The budget aims to close this gap by updating the tax code to ensure that anti-abuse rules applicable to stocks and other securities also apply to cryptocurrencies, as detailed in a fact sheet  released alongside the budget.

The administration’s summary table reveals an ambitious revenue projection from tightening regulations on digital asset transactions. By incorporating digital asset transactions into wash sale rules, the administration anticipates generating over $1 billion in fiscal year 2025, with the inclusion of cryptocurrencies in mark-to-market rules expected to bring in upwards of $8 billion.

Over the next ten years, these measures could yield $25 billion from wash sale rules and $7.3 billion from mark-to-market rules. However, the latter should contribute to the national deficit after 2025. Additionally, an excise tax on cryptocurrency mining could, potentially, cut around $7 billion from the national deficit.

Biden’s Budget Re-proposes Crypto Tax and Wash Sale Fixes

The latest budget proposal  from the Biden administration marks a repeated effort to implement a mining excise tax and address the wash sales trading loophole, echoing initiatives from last year’s budget that Congress did not incorporate into the final budget bills.

This proposal follows President Biden’s State of the Union address, where digital assets were not mentioned.

Both President Biden and former President Donald Trump appeared to clinch their respective parties’ nominations for the upcoming 2024 general election in November.

Indeed, in comparison to the seemingly-crypto sceptic Biden, Trump appears to be warming to Bitcoin. He recently claimed BTC was “an additional form of currency”.

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