How will Biden's budget affect cryptocurrencies?

U.S. President Joe Biden's proposed budget, set to be unveiled Thursday, will include a provision to close tax loss harvesting on crypto transactions. A White House official confirmed the budget will include a tax provision intended to reduce wash sales trading by crypto investors.

How does the IRS treat crypto?

The IRS treats crypto as property, not as a security, which is how the asset class escapes these rules. President Biden already passed a crypto-related tax provision that was tucked in his 2021 infrastructure act, causing an uproar from the industry.

Can you sell a crypto investment at a loss?

Investors can sell crypto investments at a loss, take the tax-deductible loss to reduce their tax burden, and buy right back into the same investment. The budget eliminates this and subjects crypto to the same so-called wash-sale rules that apply to stocks and bonds.

How will the White House Budget affect cryptocurrencies?

A White House official confirmed that the budget will include a tax provision intended to reduce wash sales trading by crypto investors. At present, investors can sell any cryptocurrencies at a loss, claim the loss on their taxes and then buy the same amount and type of cryptocurrencies again.