President Joe Biden took a dig at Republicans in a tweet on Tuesday claiming that if Congress got rid of tax loopholes that tend to support the wealthy Crypto Investors then the Government would profit $18 Billion from that.
People from the Crypto Industry did not get with the President’s assertive statement and completely denied the very existence of any such crypto loophole existing currently.
Reaction to President’s Tweet
Managing Partner of Cinneamhain Ventures, Adam Cochran tweeted regarding the President’s statement expressing and explaining how Crypto is one of the most suffered assets in comparison to other assets on the basis of how they are taxed. He openly called in his tweet to cite the supposed loophole that the President talked about. The elimination of the Wash Sale loophole for Digital Assets that will be included in the Biden Budget forecasts $23 Billion that will be brought over the next 10 years. The anticipated number for 2024 is $1.34 Billion only.
Although the question still remains as to where Mr. President is getting the $18 Billion figure from.
The Wash Trading
Ahead of the Budget’s release Wall Street Journal reported that a change in taxation related to Crypto Transactions was proposed by the Presidents that would raise $24 Billion. Although back then the Government denied the Wash Trading Rules applicability on Digital assets.
The wash trading rule prohibits traders to sell assets at a loss and buy them back rapidly so that illicit tax benefits cannot be taken. But Crypto is an exception to this particular rule and people in Crypto can take advantage of it. Recently a Bloomberg report suggested that Crypto traders have been using Wash Tactic by exploiting wild price swings in the assets and have avoided billions in taxes by doing so.
The National Bureau of Economics cited in one of its papers that if the traders were smart enough to use the Wash Trading Exception during the Bitcoin Crash the Treasury would have lost around $16 Billion in Taxes. A research note from Joseph Abate at Barclays included an extrapolation based on a 2017 IRS calculation that suggested that the funding gap from unpaid taxes by crypto traders could amount to around $50 billion a year.
Joe Biden has a record of forcing the Crypto Industry down. Biden recently prompted a 30% tax on electricity used by Bitcoin Mining companies which has pushed the companies further back along with high energy prices due to Inflation.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/05/11/bidens-18-billion-tweet-raises-questions-on-crypto-tax/