White House Expects to Raise over $10b in Revenue under New Crypto Tax Rules
On Monday, The Biden Administration released its budget plan for the fiscal year of 2023. The budget proposal, which totals $5.8 trillion with a $1.15 trillion deficit, features some hints on the administration’s long-term plans for cryptocurrency.
The budget plan proposes modernizing rules for digital assets through expanding tax reporting requirements. The expansion of the crypto tax rules would enable the White House to bring in over $10 billion in new revenue over the next decade. The proposed federal budget expects about $5 billion in additional revenue in 2023 alone.
The projected tax revenue is based on proposals to revise rules related to digital assets. The bulk of the additional revenue would come from a proposal seeking to extend “mark-to-market” rules to more digital assets. This could mean that cryptocurrencies that appreciate prices might be taxed regardless of whether they make sales or not.
The plan is part of the Biden administration’s effort to reduce the national deficit by more than $1 trillion over the next decade.
The Biden budget also seeks an additional $52 million in funding for the Department of Justice to hire more agents and acquire analytical capabilities as part of the administration’s commitment to counter cyber threats, including boosting programs to combat the misuse of crypto coins.
Major Step for Crypto Use
Earlier this month, President Biden issued an executive order that confirmed the importance of cryptocurrencies while stressing the need to protect the financial system as well as consumers and investors.
The executive order is a call to action rather than a specific game plan. It highlights a series of non-controversial policy statements, such as the need to protect US consumers, investors, and businesses and support technological advances that promote responsible use and development of digital assets.
The administration seeks to strike the right balance between the positives of cryptocurrency —financial inclusion, efficiency, American leadership in global finance— and its negatives: regulatory arbitrage, potential business and consumer abuse, and illicit financing.
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