Biden Budget Proposal Targets Crypto Investors Using Like-Kind Exchange Provision; Plan Aims to Tax Crypto Miners 30%

March 10, 2023 Bitcoin.com

Breaking: Bitcoin slips under $20K amid Biden budget, Silvergate collapse

March 10, 2023 Coin Telegraph

Biden

The price of BTC briefly slipped under $20,000 on March 10, although at time of writing was hovering just above that level.

Bitcoin (BTC) briefly slipped below $20,000 for the first time in nearly two months, following the latest budget from United States President Joe Biden and the collapse of “crypto-bank” Silvergate.

The price of BTC dipped to $19,945 on March 10 before recovering to hover just above $20,000, according to data from CoinMarketCap.

Bitcoin had a stellar start to 2023 but fell as much as 5% in an hour on March 3 amid uncertainty at Silvergate. The price doesn’t appear to have been able to lift since.

*Price chart of Bitcoin over the last seven days. Source: Cointelegraph Markets Pro*

The announcement that Silvergate Bank, one of the key banks in the United States that services crypto firms, had entered into voluntary liquidation on March 8 has emerged as a possible strong headwind for the crypto industry.

Meanwhile, a supplementary budget explainer paper on March 9 revealed that United States crypto miners could eventually be subject to a 30% tax on electricity costs under a Biden budget proposal that aims to “reduce mining activity.”

Biden budget proposes 30% tax on crypto mining electricity usage

March 9, 2023 Coin Telegraph

30% mining tax

The tax would be phased-in at 10% per year over three years and covers electricity generated from both on and off-grid sources.

A phased-in 30% tax on cryptocurrency mining electricity costs has been proposed by United States president Joe Biden in his administration's 2024 fiscal year budget.

A Department of the Treasury supplementary budget explainer paper released Mar. 9 said any firm using resources — whether they be owned or rented — would be "subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining."

One of the few surprises in the Biden budget. A proposed excise tax on electricity usage from crypto mining. Phasing in at 10% in year one and climbing to 30%. pic.twitter.com/UPgUdr8CeG
— John Buhl (@jbuhl35) March 9, 2023

It proposed the tax would be implemented in the taxable years after Dec. 31, 2023, and would be phased in over three years at a rate of 10% a year, reaching the max 30% by the third year.

Crypto miners would have reporting requirements on the "amount and type of electricity used as well as the value of that electricity."

Crypto miners who acquire their electricity needs off-grid would still be subject to the tax, and would be required to estimate the electricity costs generated by any "electricity generating plant."

This is a developing story, and further information will be added as it becomes available.

Biden wants to double capital gains and clamp down on crypto wash sales: Reports

March 9, 2023 Coin Telegraph

Biden

The Biden administration wants to apply the wash sale rule to digital assets.

U.S. President Joe Biden’s upcoming budget proposal has a few surprises for crypto traders and investors, including a proposed doubling of capital gains and a crackdown on crypto wash sales.

The Biden administration is set to release its fiscal 2024 budget plan on Mar. 9 which is reportedly aimed at reducing the deficit by almost $3 trillion over the next decade. It also includes changes to crypto tax treatment with the aim of raising around $24 billion, according to reports.

One of these proposals includes an end to a strategy in which a crypto trader sells assets at a loss for tax purposes, known as tax-loss harvesting, before repurchasing them immediately after, according to the WSJ.

President Biden's 2024 budget plan will seek to save hundreds of billions of dollars by lowering drug prices and raising some business taxes https://t.co/oKDdy8h5cG
— The Wall Street Journal (@WSJ) March 8, 2023

Such a strategy is not permitted when stocks and bonds are involved — under current wash sale rules — However, crypto is currently not under these same rules as digital assets have not been classified as securities.

However, it appears that the U.S. government is looking to change that.

Speaking to Cointelegraph, Danny Talwar, from crypto tax software firm Koinly commented:

“This is an inevitable consideration for the US which, if implemented, will see it on par with other jurisdictions such as Canada and Australia, where crypto wash sales apply.”

“If the rule is applied, the timing is significant as many crypto holders who entered the crypto space on the back of 2021 market peaks are suffering from heavy losses,” he added.

The Biden budget is also proposing to nearly double the capital gains tax rate for investments to almost 40% from 20% and raise income levies on corporations and wealthy Americans, according to Bloomberg.

Biden proposing to double capital gains taxes from 20 to 40% and not allowing for tax loss harvesting on #bitcoin .... WTF... pic.twitter.com/SnJNglpoAA
— Lark Davis (@TheCryptoLark) March 9, 2023

Gate.io to enter Hong Kong following city’s $6.4M budget allocation to Web3

February 23, 2023 Coin Telegraph

Budget

Gate’s founder called Hong Kong a “hub,” meanwhile, the city’s financial secretary said the region “must keep up” with the “huge potential” of Web3.

Cryptocurrency exchange Gate.io is gearing up to launch a presence in Hong Kong following the local government's planned $6.4 million (50 million Hong Kong dollar) cash injection into Web3 as per the city’s 2023-24 budget.

Gate Group said on Feb. 22 that it will apply for a crypto license in Hong Kong allowing it to launch “Gate HK.” The firm's local company, Hippo Financial Services, gained a license in August 2022 to provide virtual asset custodial services.

It comes as Hong Kong financial secretary, Paul Chan, announced the Web3-related funding and the creation of a crypto task force in a Feb. 22 budget speech.

He added Web3 has “huge potential” and the Special Administrative Region of China must keep pace with its “continuous development.”

“We must keep up with the times and seize this golden opportunity to spearhead innovation development.”

Chan outlined the funds would go toward expediting “the Web3 ecosystem development” by organizing international seminars, promoting business cooperation and arranging “workshops for young people.”

He noted a “large number” of companies are considering setting up shop in the city due to the government’s cryptocurrency laws. Gate Group’s founder, Dr. Han Lin, called Hong Kong “a global strategic market” and a “hub” due to its “industry-leading regulatory regime.”

Very excited about Hong Kong. Having obtained the TCSP License in HK, Gate Group is also preparing for a crypto license and fine tuning Gate HK, a new entity tailored to serve HK’s growing crypto market, stay tuned.
— Lin Han (@han_gate) February 21, 2023

Hong Kong shared its plans on Feb. 20 with a new licensing regime and a proposal to allow retail traders access to licensed crypto platforms.

Due to the influx of business interest, Chan said he “will establish and lead a task force” on virtual asset development made up of members from financial regulators, market participants and “relevant policy bureaux.”

The task force would “provide recommendations on the sustainable and responsible development of the sector” according to Chan.

Hong Kong started its push to gain status as a global crypto hub in October 2022 by launching crypto-friendly policy frameworks to regulate the industry within the city.

Despite being a region of China, the city’s special status allows for its own laws and governance. Hong Kong’s crypto push would seem to be in contrast to China’s crypto ban, but it's reported that officials in Beijing are quietly backing the region's crypto ambitions.

Italy Wants to Tax Crypto Gains at 26% From 2023

December 1, 2022 Bitcoin.com

Canada to examine crypto, stablecoins, and CBDCs in new budget

November 4, 2022 Coin Telegraph

Budget

Canada’s government stated its concerns on the risks digital assets and the digitalization of money may pose to its financial system as a reason for launching the consultation.

The Canadian federal government is set to launch a consultation on cryptocurrencies, stablecoins, and Central Bank Digital Currencies (CBDCs) as revealed in its new mini-budget.

The government's “2022 Fall Economic Statement” released on Nov. 3 by Deputy Prime Minister Chrystia Freeland works as a fiscal update in conjunction with its main yearly budget.

The statement included a small section on “Addressing the Digitalization of Money” that outlined the government’s crypto plans.

It said the rise in cryptocurrencies and money digitalization is “transforming financial systems in Canada and around the world” and the country’s financial system regulation “needs to keep pace.”

The statement opined that money digitalization “poses a challenge to democratic institutions around the world” highlighting cryptos use in sanctions avoidance and illicit activity financing both domestically and abroad.

In the statement, the government said consultations with stakeholders on digital currencies, stablecoins, and CBDCs are being launched on Nov. 3 although exactly which stakeholders will be engaged remains unclear.

The announced consultations is understood to be as part of the government’s intention to launch a “financial sector legislative review focused on the digitalization of money and maintaining financial sector stability and security,” which was part of the 2022 budget released on Apr. 7.

This review will also examine the “potential need” of a Canadian CBDC in light of these risks.

In January protests broke out in the nation's capital of Ottawa regarding the COVID-19 vaccine mandate and restrictions in Canada with protestors migrating to crypto fundraising platforms after being kicked off competing fiat fundraising platforms.

The province of Ontario declared a state of emergency on Feb. 11 due to the protestor’s road blockades resulting in its government freezing millions in donations to protestors, at the time protestors raised around 21 Bitcoin (BTC), worth $902,000.

Prime Minister Justin Trudeau invoked the Emergencies Act on Feb.14 for the first time in Canada’s history giving him the power to freeze protesters’ bank accounts and monitor “large and suspicious transactions,” including crypto.

Two days later Canada's federal police force sent letters to several crypto exchanges demanding they stop processing transactions of more than 30 specific crypto wallet addresses linked to the ongoing protests.

Budget