Are Crypto Miners Facing a Big Tax Hit? U.S. President’s Latest Budget Proposal Has Surprising New Rules for Digital Assets

U.S. President Joe Biden has released his proposed fiscal year 2025 budget, which includes a number of tax measures aimed at regulating the cryptocurrency industry. The proposed budget includes a crypto mining excise tax, as well as addressing the treatment of digital assets in wash-sale rules.

These proposed taxes are similar to those proposed in last year’s budget, but ultimately were not taken up by Congress. However, the Biden administration is hoping to generate significant revenue from these measures, estimating nearly $10 billion in 2025 and over $42 billion over the next decade.

The proposed budget includes a number of measures related to cryptocurrency, including applying wash sale rules to digital assets, requiring financial institutions and digital asset brokers to report information, and implementing foreign crypto account reporting rules. Additionally, the proposed budget includes an excise tax on crypto mining and incorporating digital assets into mark-to-market rules.

According to the proposal, these measures are aimed at “closing other tax loopholes that overwhelmingly benefit the rich and largest, most profitable corporations.” This includes closing the “like-kind exchange loophole” used by real estate investors to defer taxes indefinitely, as well as implementing reforms to prevent the wealthy from amassing tax-free fortunes through retirement incentives and life insurance tax shelters.

The proposed budget also addresses wash trading, a practice that has been prevalent in the non-fungible token (NFT) markets within the crypto industry. It aims to stop people from selling an investment for a loss and then quickly rebuying it.

The administration estimates that including digital asset transactions in wash sale rules alone could generate over $1 billion in 2025, and over $8 billion by including cryptocurrencies in mark-to-market rules. Over a 10-year period, these two measures could bring in a combined $32.3 billion.

In addition, the proposed budget includes an excise tax on mining, which the administration expects could bring in an additional $7 billion over the next decade.

This is not the first time the Biden administration has proposed these measures. Last year’s proposed budget included similar provisions that were not ultimately included in budget bills passed by Congress.

The release of this budget proposal comes after Biden’s State of the Union address, in which he did not mention digital assets. However, his administration’s focus on regulating the crypto industry is clear with these proposed measures.

Overall, the proposed budget suggests that the administration is taking steps to regulate the crypto industry and close loopholes that benefit the wealthy. These measures could have significant impacts on the industry, and their inclusion in the budget proposal highlights the importance of addressing these issues in the eyes of the Biden administration.