With the help of the Democrats’ new proposal for crypto taxation, “wash sales” of crypto investors are to be prevented.
Are the US Democrats making life unbearable for the crypto industry or are they really interested in the common good?
The current proposal by the Democrats goes one step further than the Infrastructure Act has so far provided. According to Bloomberg, the “wash sale” rule is to be extended to include raw materials, currencies and digital assets. So far, this has primarily been about securities. The Democrats now reckon that this expansion could bring about $ 16 billion in taxes to the state over the next ten years.
Biden’s heavy infrastructure bill is designed to boost the US economy. It is intended to create jobs and modernize the infrastructure. Specifically, bridges and roads are to be renewed, the Internet is to be expanded and the water and power supply modernized. The American president would like to provide a total of over one trillion US dollars for this purpose. To do this, he is ready to both take on new debt and raise tax rates for those who earn more than $ 400,000 a year.
Oh, and: The crypto industry should also serve as a donor, please.
After the crypto lobby in the House of Representatives failed, as reported in August, the prospects for a free crypto industry have now become even bleak. So far, cryptocurrencies have primarily come under the property category. This is why certain tax regulations have not yet taken effect. That should change: Now, in the end, everyone who owns digital assets in any form should be considered a broker. This also includes miners, stalkers and certain protocols from the DeFi area. They are supposed to file forms with the United States Federal Tax Service (IRS) on behalf of their customers, thereby helping to modernize America. Thus, tax revenues of up to 28 billion US dollars could be recorded.
Background information on wash sale
“Wash-Sale” refers to the process that investors use their securities with loss sell and buy back in full with immediate effect. This procedure is so attractive because it reduces the tax burden. Because ultimately only realized Profits taxed.
That is why there is a wash sale ban, which stipulates that there must be at least 30 days between purchase and sale.