Biden Budget Puts Cryptocurrency in Crosshairs
Government regulations related to cryptocurrency are slowly evolving to keep up with the fast-growing industry. In his recent 2023 budget proposal, President Joe Biden included several provisions related to digital currencies, some of which could generate up to $11 billion in government revenues. Here's a breakdown of what cryptocurrency enthusiasts may want to know.
One line in the Biden budget proposal indicates increased revenues from amendments to «the mark-to-market rules to include digital assets.» For those without a background in accounting, mark-to-market rules require certain taxpayers to recognize profits from an increase in value before the sale date.
Increasing the scope of mark-to-market rules to include cryptocurrencies wouldn't likely affect most individuals. The updated rules primarily apply to businesses and individuals involved in professional investing or trading.
Other changes related to cryptocurrencies would require reporting of foreign digital asset accounts. Among all cryptocurrency-related updates, the Biden administration expects an estimated $11 billion in additional government revenue over the next 10 years.
As an example of how this works, consider a firm that bought Bitcoin, Ethereum, and other digital assets early on, leading to unrealized gains of millions or billions of dollars. Mark-to-market rules would require the company to recognize those unrealized profits for tax purposes. Depending on profits recognized and tax rate, those payments could be significant. The one-time result would include $4.8 billion in tax revenues in 2023 if the budget is adopted as proposed.
While law-abiding cryptocurrency traders shouldn't worry, cybercriminals using digital assets may be concerned about a
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