Joe Biden’s budget plan covers a mining tax and crypto wash trading

An excise tax on cryptocurrency mining has been proposed by the administration of US President Joe Biden in an effort to reduce energy consumption and promote a more environmentally sustainable policy in response to the expansion of digital asset mining. An organization that leases or possesses computing resources for the purpose of mining digital assets would be subject to an excise tax equal to 30% of the utility costs accrued during the mining operation. If enacted into law, miners would be required to disclose the total electricity consumed during mining, which would be applicable to taxation.

The proposition will now be voted on by Congress, who possesses the authority to “impose and collect taxes, duties, imposts, and excises” and possesses the power of the treasury. It is unclear whether the proposition will become legislation, as of now. In the event that the excise tax is implemented, miners would be obligated to disclose the aggregate amount of power consumed during the mining process, which would subsequently be subject to taxation.

Furthermore, miners would be liable to pay the transfer of assets tax upon selling the tokens they have acquired during the mining process. The tax is expected to be progressively implemented throughout a span of three years, as stated. In the first year, a taxation rate of 10% would be enforced; by the second year, that rate would have escalated to 20%; and by the third year, it would have reached its peak at 30%.

The tax is projected to generate $302 million in its first complete year and approximately $7.7 billion over the subsequent ten years, according to estimates by the White House. Aligned with India’s strategy—which entails a 30% (plus 4% cess) tax on cryptocurrency trading in accordance with Section 115BBH—the proposition put forth by the United States to tax cryptocurrencies considered tangible property enables an additional avenue to bypass money laundering regulations.

Despite the displeasure expressed by some cryptocurrency devotees regarding taxation, the United States government permits a variety of exemptions from the law regarding the loss of cryptocurrency. For instance, in the event of fraud or the theft of private keys, taxpayers can now simply deduct the loss from their calculations. Further, in an effort to tighten up the cryptocurrency market, the U.S. budget report also proposes a new law called the ‘wash sale rule’ to combat wash trading, which is an illicit practice wherein an individual trader rapidly purchases and sells identical securities to falsify information about the market to typically exploit crypto tax losses.

Scott Cook

Scott Cook got into crypto world since 2010. He has worked as a news writer for three years in some of the foremost publications. He recently joined our team as a crypto news writer. He regularly contributes latest happenings of crypto industry. In addition to that, he is very good at technical analysis.

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