Biden opposes cryptocurrencies and rejects debt deal that favors them

22 May 2023

Originally Posted On Publish0x

U.S. President Joe Biden has shown his rejection of a possible debt limit deal that would benefit cryptocurrency traders. As reported by the Cointelegraph portal, Biden called the conditions proposed by Republican leaders "unacceptable" during a press conference at the Group of Seven (G7) Summit.

The deal in question would involve the end of so-called tax loss harvesting for cryptocurrency transactions, a strategy that investors use to reduce their total tax liabilities. It consists of selling a cryptocurrency at a loss to offset capital gains from crypto gains. To claim a loss, the assets must be sold and the proceeds used to purchase a similar asset within 30 days before or after the sale.

This mechanism is also available for stocks and other assets, but the White House wants to block it for cryptocurrencies, arguing that it gives an unfair advantage to traders in this sector. In addition, the Biden administration presented Republicans with another similar proposal that prohibits investors from deferring taxes on real estate swaps. Both changes would add about $40 billion in tax revenue for the U.S. government.

However, Republicans have rejected the proposals, claiming that the debt problem is not due to a lack of revenue but to overspending. House Speaker Kevin McCarthy claimed that the rising U.S. debt is a "spending problem, not a revenue problem," citing the Biden administration's overspending during the pandemic.

Meanwhile, the White House blames the debt problem on tax cuts by previous administrations, especially Donald Trump's, that significantly reduced state revenues. Republicans want to close the deficit with $4.8 trillion in spending cuts, which would directly affect federal agency budgets.

Biden's stance against cryptocurrencies comes on top of other regulatory measures that have generated uncertainty and concern in the market. For example, the proposed infrastructure bill that includes a broad and ambiguous definition of "broker" for crypto transactions, which could force many players in the ecosystem to report tax information to the government.

In addition, the U.S. Treasury has announced its intention to impose sanctions on entities that use cryptocurrencies to finance illicit activities or evade sanctions. These measures could especially affect countries such as Iran or Venezuela, which have resorted to cryptocurrencies as a way to circumvent the economic restrictions imposed by the United States.

Against this backdrop, many cryptocurrency advocates have expressed their discontent and disappointment with the Biden administration, which seems to be more interested in collecting taxes and controlling the sector than in fostering innovation and financial freedom. Some senators such as Cynthia Lummis or Ted Cruz have shown their support for cryptocurrencies and have criticized the government's restrictive measures.

However, there are also voices that see an opportunity in the increased regulatory attention towards cryptocurrencies, as it could give more legitimacy and security to the sector. This has been stated by Coinbase CEO Brian Armstrong, who has said that "regulation is a sign of success" and that "when a sector becomes big enough to have an impact on the real world, it is natural that there will be more scrutiny".

The truth is that cryptocurrencies have become an increasingly relevant and controversial topic in the global political and economic arena. Their exponential growth and disruptive potential pose challenges and opportunities for governments and citizens alike. The question is how to strike a balance between regulation and innovation, between protection and freedom.

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Author's Note: The opinion expressed here is not investment advice, is provided for informational purposes only, and reflects the opinion of the author only. I do not promote, endorse or recommend any particular investment. Investments may not be right for everyone. Every investment in the market and every trade you make involves risk, so you should always do your own research before making any decision. I do not recommend investing money that you cannot afford to chair, as you could lose the entire amount invested.

“Everyone has their own forms of expression. I think we all have a lot to say, but finding ways to say it is more than half the battle" - Criss Jami.

"Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth" - Marcus Aurelius.

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