Joe Biden Proposes New Crypto Regulation, Including A Mining Tax And 'Wash Sale Rule'
President Joe Biden's budget proposal for fiscal 2025, released this week, covers nearly every area of the American economy. Some of the more notable items detailed in the budget revolve around new crypto taxes and regulations.
In terms of new taxes, the Biden administration unveiled plans for an excise tax on mining cryptocurrencies.
"Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30% of the costs of electricity used in digital asset mining."
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If the excise tax is passed, it would require miners to report how much electricity they use and then be taxed on that electricity. This tax would be on top of the gain on the sale of assets tax that miners pay when they sell their tokens. The tax would be rolled out over three years, with the first year taxing 10%, the second year 20% and fully realizing the 30% tax in year three.
"The increase in energy consumption attributable to the growth of digital asset mining has negative environmental effects and can have environmental justice implications as well as increase energy prices for those that share an electricity grid with digital asset miners," according to the Treasury Department. "Digital asset mining also creates uncertainty and risks to local utilities and communities, as mining activity is highly variable and highly mobile."
The White House predicts that the tax could bring in $302 million in its first full year and $7.7 billion over the next decade.
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The report also mentions a new proposed role for wash trading, a form of market manipulation that usually involves buying and selling large amounts of an asset in a short time, usually for tax-loss harvesting purposes.
"The budget eliminates this tax subsidy for cryptocurrencies by modernizing the tax code's anti-abuse rules to apply to crypto assets just like they apply to stocks and other securities," the White House said.
The proposal would make it so that the tax benefits of wash trading would only be realized if the asset is sold and not bought again within 30 days. This would incentivize some to not partake in wash trading and increase tax revenue for those who still wash trade.
The Biden administration predicts that the new rule will bring in nearly $26 billion in revenue over the next decade.
The proposed budget has received strong pushback from Republicans. Speaker of the House Mike Johnson (R-LA) said, "The price tag of President Biden's proposed budget is yet another glaring reminder of this administration's insatiable appetite for reckless spending and the Democrats' disregard for fiscal responsibility. Biden's budget doesn't just miss the mark — it is a roadmap to accelerate America's decline."
The budget is one of the most contentious issues in politics and often takes many revisions before it is passed. There is a chance that some of the crypto regulations will be removed from Biden's budget proposal. Nothing is certain until the final budget is passed.
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