Joe Biden’s budget proposal aims to raise $11 billion from crypto taxes

US President Joe Biden’s budget proposal released on
Monday expects an additional $11 billion in revenues by 2032 from revised
crypto rules. It anticipates around $5 billion in revenue in 2023 alone.

The projected tax revenue is based on proposals to
modernize rules related to digital assets. It also aims to expand the
Department of Justice’s ability to counter cyber threats that involve
ransomware and the use of cryptocurrencies.

Also Read | President Joe Biden says $5.8 trillion plan shows his priorities, higher tax on rich

As part of the administration’s plan to update the
digital asset rules, the administration will amend the mark-to-market rules to
include digital assets, require foreign digital asset accounts to be reported
by certain taxpayers, provide financial institutions and crypto brokers with
reporting requirements, and treat loans of securities as tax-free to include
other asset classes and address income.

Also Read | Cryptocurrencies helping Ukraine raise millions in war against Russia

According to the administration estimates, modernizing
these rules will generate almost $11 billion in revenue between 2023-2032, with
over $4.8 billion coming from the first year of applying mark-to-market rules
to digital assets.

The proposal also seeks to expand the DOJ’s budget by $52
million for “more agents, enhanced response capabilities, and strengthened
intelligence collection and analysis capabilities”. It also noted that these
investments are in line with the Administration’s counter-ransomware strategy
that emphasizes disruptive activity and combating the misuse of cryptocurrency.

Also Read | US President Joe Biden’s butcher remark on Russia’s Vladimir Putin ‘alarming’: Kremlin

The Department of the Treasury explains that
mark-to-market changes would add actively traded digital assets and derivatives
of these assets to a category subject to such rules at the end of each year.
However, not all digital assets would qualify-only those that were regularly
traded for US dollars or other fiat currencies, have sufficient volume to
generate reliable estimations and have reliable price quotes available.

Also Read | White House scrambles to cover up Biden’s ‘butcher’ remark on Putin

The proposal would be effective for tax years beginning
after December 31, 2022.

The rules for loans of digital assets would be updated as
well. According to a Treasury explanation report, the market for lending
financial assets and other assets has expanded over time to include digital
assets and interests in publicly traded partnerships. The securities loan
non-recognition rules should be amended to take this expansion into account, it
added.

Also Read | Joe Biden’s budget blue print: $795 billion for defense, $915 billion for domestic programs

A proposed rule change would amend the securities loan
nonrecognition rules so that they apply to loans of actively traded digital
assets recorded on cryptographically secure distributed ledgers as long as the
loan terms are the same as those currently required for securities loans.