U.S. President Joe Biden takes a swipe at wealthy tax cheats and crypto traders in a bid to raise funds for his $2.3 trillion infrastructure plan. In a speech on Wednesday, April 28, 2021, Biden called for an overhaul of the tax system that would require those earning at least $1 million annually to pay more in taxes. Biden also targeted individuals who use cryptocurrencies and other assets to evade taxes and called for increased regulation of digital currency platforms.
The proposed tax changes are part of an effort to address income inequality and raise funds to invest in infrastructure, education, and healthcare. Biden stated that the tax code is rigged in favor of the wealthy, and that those earning significant incomes must contribute their fair share.
During his speech, Biden specifically mentioned hedge funds and wealthy individuals who use sophisticated tax planning strategies to reduce their tax bills. He said that such strategies have contributed to the growing income inequality and decreased government revenue.
The President’s proposals also seek to strengthen the IRS’s auditing capabilities. Biden called for an increase in the size of the agency and a crackdown on tax loopholes, offshore tax havens, and other tax evasion methods.
The speech raised concerns among crypto enthusiasts. Biden’s call for an increase in regulation of digital currencies could mean increased scrutiny for platforms such as Coinbase and Binance. The Biden administration has stated that it plans to implement a new reporting requirement for crypto exchanges that will require them to provide information on customer transactions to the IRS.
The speech’s impact on the crypto market was immediate, with the value of Bitcoin, the world’s most valuable digital currency, dropping by nearly 5% within an hour of Biden’s remarks. Other cryptocurrencies also experienced significant price drops following the speech.
Biden’s comments are part of a broader crackdown on cryptocurrencies that are seen as facilitating illegal activities such as money laundering and terrorism financing. The administration has also emphasized the need to protect consumers from fraud and other risks associated with digital currencies.
The push for increased regulation has brought together lawmakers from both sides of the political aisle. The Senate Banking Committee recently held a hearing on cryptocurrencies, during which lawmakers discussed the need for increased regulation and oversight of the digital currency industry.
Not everyone is in agreement with Biden’s proposals, however. The Republican Party has criticized the President’s infrastructure plan, stating that it is too costly and that it contains too many provisions unrelated to infrastructure.
The proposed tax changes have also faced opposition from some wealthy individuals and corporations, who argue that they will stifle economic growth and discourage investment. However, Biden has countered that argument, stating that investing in infrastructure will create jobs and spur economic growth in the long run.
In conclusion, Biden’s call for increased regulation of cryptocurrencies and heightened scrutiny of tax evasion methods is part of a broader effort to address income inequality and invest in infrastructure. While his proposals have faced opposition from some quarters, they have also received broad support from many lawmakers and policy experts. Whether they will ultimately be implemented remains to be seen, but for now, they are sure to contribute to lively debates on tax reform and the future of cryptocurrencies.
During the G7 summit in Hiroshima, Japan, President Joe Biden spoke about his refusal to agree to Republican demands amid ongoing negotiations over the nation’s debt ceiling. He also made a brief reference to crypto, “I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk for nearly a hundred, well, I should mean, 1 million Americans.” Biden’s grouping of “crypto traders” with “wealthy tax cheats” indicates his administration’s periodic focus on the industry, which the White House has commented on as Congress continues to battle over bills to outline comprehensive crypto regulation.
The reference to crypto comes as the US government reaches a Congress-imposed limit on how much it can borrow to pay its ongoing costs. If the US can no longer borrow money, the country faces a potential default, which may result in higher interest rates, delayed Social Security payments, and job loss. In a divided Congress, both parties have used the debt ceiling to try to extract concessions from one another. In March, the closing of a crypto tax loophole called a “wash sale,” or when investors quickly sell and then repurchase cryptocurrency to claim losses on tax returns, was reportedly part of debt ceiling negotiations.
The president’s reference to crypto during the summit is consistent with his administration’s approach to digital assets. In March 2022, Biden signed an executive order that outlined the executive branch’s approach to policymaking around digital assets. Later that year, in September, the White House released a framework for the “responsible development of digital assets.” And earlier this month, Biden released a proposal to tax US cryptomining firms 30% of the cost of electricity they use while mining.
Biden’s focus on crypto has not gone unnoticed by members of the crypto industry. In May, Biden voiced support for eliminating tax loopholes for crypto, posting a graphic on Twitter that read: “We think Congress should cut tax loopholes that help wealthy crypto investors.” However, for some in the crypto industry, it remained unclear from where the $18 billion figure was sourced.
In conclusion, while President Biden’s brief mention of crypto at the G7 summit may have been overshadowed by the discussions on the nation’s debt ceiling, it reflects his administration’s interest in regulating the digital asset space. As Congress continues to grapple with comprehensive crypto regulation, it remains to be seen how Biden’s proposals will fare in a divided Congress. Regardless, crypto traders now know that they are included in the president’s sights, alongside “wealthy tax cheats.”
