Once again a proposal for regulation by US authorities is impacting crypto investors. On September 13, House Democratic released a proposal on the ominous Tax Infrastructure Act that will raise billions of dollars but restrict investors.
The new proposal will close a loophole used by some crypto investors
This time, the proposal comes from House Democrats, which on Monday released a package of proposed tax increases to fund White House’s $3.5 trillion spending package. Among the $2 trillion in tax increases is a proposal to include cryptocurrencies in the so-called “wash sale” rule, which would raise an estimated $16 billion over a decade.
The new amendment closes a loophole used by some crypto investors. The loophole helps investors avoid capital gains taxes if they sell at a loss. To do so, investors must wait 30 days before buying back the shares or making an equivalent investment. Otherwise, the sale is considered a “wash sale and does not qualify for a capital gains tax deduction.
According to Internal Revenue Service (IRS), cryptocurrencies currently fall under the property law. Therefore, they do not subject to these rules. As it stands, investors in digital assets can buy and sell cryptocurrencies and claim deductions. However, this new proposal changes that.
Regulation in the crypto industry is increasing
This is the latest news out of Washington on cryptocurrency regulation in recent months. Over the summer, the cryptocurrency industry felt threatened by the original Tax Infrastructure bill that broadly defined the term”broker” This placed nearly every player in the crypto industry, from decentralized exchanges to miners, in the same reporting category. In addition to regulation, cryptocurrencies have also been subjected to strict oversight by the US regulator National Security Agency Exchange Commission (SEC). Recently decentralized exchange Uniswap had been investigated by the SEC.
Originally, the section mentioning the cryptocurrency industry was small. But even though this additional section is small, the many small changes are adding up and seem to be affecting investors more and more. According to House Speaker Nancy Pelosi, officials commit to submitting a final crypto tax proposal by September 27.