White House proposes crypto regulations to boost federal revenue

White House proposes crypto regulations to boost federal revenue - Regulation News - News

U.S. President Joe Biden’s recently unveiled budget proposal for the fiscal year 2024 includes several measures targeting the cryptocurrency sector, which the administration believes could potentially generate substantial revenue for the government. The proposals revolve around extending existing financial regulations to digital assets and enforcing stricter reporting requirements.

Application of Wash Sale Rules to Digital Assets

One of the central components of the proposal is the application of wash sale rules to digital assets. This rule prohibits an investor from claiming a loss if they buy back a security within a specific period after selling it, effectively disallowing taxpayers from realizing capital losses on trades of digital assets. The budget proposal estimates that this measure could raise over $1 billion in the 2025 fiscal year alone, and potentially generate more than $8 billion by the same year through the inclusion of cryptocurrencies in mark-to-market rules.

Mark-to-Market Rules for Cryptocurrencies

Mark-to-market rules are financial reporting regulations that require firms to recognize the current market value of their assets and liabilities on their balance sheets. The proposal aims to incorporate cryptocurrencies into these rules, requiring digital asset holders to recognize capital gains or losses when the value of their assets changes. This measure is projected to contribute $32.3 billion to federal revenues over a ten-year period.

Excise Tax on Crypto Mining

Another significant measure in the proposal is an excise tax on crypto mining. The budget suggests that this tax could generate about $7 billion in revenue over the next decade by reducing the national deficit. The Biden administration had previously proposed similar tax provisions in last year’s budget, but they were not enacted by Congress.

Apart from Crypto Taxes, Other Revenue Generation Measures

These proposed regulations are part of a broader effort by the Biden administration to close tax loopholes and increase tax revenues from the wealthy and large corporations. The budget also includes proposals to address other tax-related issues, such as:

  • Targeting the like-kind exchange loophole, which allows investors to defer capital gains taxes on certain transactions involving real property and personal property.
  • Curbing abuses of tax-preferred retirement incentives like 401(k)s, IRAs, and other qualified retirement plans.
  • Repealing a tax break for corporate jets that allows corporations to fully expense the cost of an aircraft over five years, instead of recovering the cost through depreciation.

“Our budget proposal makes the tax system more fair and efficient, ensuring that everyone pays their fair share,” said a senior administration official.

Implications for the Crypto Community

The proposed regulations are likely to stir significant discussion within the crypto community. Some experts believe that these measures could potentially hinder innovation and investment in the sector, while others argue that they are necessary to ensure tax fairness and compliance.

“The crypto industry has grown exponentially over the past few years, and it’s only a matter of time before regulators take notice,” said David Yermack, a professor of finance and business technology at New York University’s Stern School of Business. “These proposals are an important step in ensuring that digital assets are subjected to the same regulations as traditional financial instruments.”

“However, it’s essential to strike a balance between regulatory oversight and fostering an environment that encourages innovation,” Yermack added.


In summary, the Biden administration’s latest budget proposal includes several measures aimed at extending existing financial regulations to digital assets and generating revenue from the cryptocurrency sector. These initiatives include applying wash sale rules to digital assets, incorporating cryptocurrencies into mark-to-market rules, and imposing an excise tax on crypto mining. These proposals are expected to generate nearly $10 billion in 2025 and exceed $42 billion over the next decade in tax revenues, and could have significant implications for the crypto community.