Democrats push to close digital currency tax loophole through blank sale rule

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Democrats in the U.S. Congress are pushing to close a digital currency tax loophole, which would in part help raise funds for their new $ 3.5 trillion spending program.

House Democrats are looking to raise $ 2 trillion in funds for the spending program through tax increases, of which $ 16 billion is expected to come from the digital currency industry via the tightened measures.

The proposals would see digital currency assets, as well as a range of other assets added to the wash-sell rule, which would bring more transactions into the scope of the tax.

Currently, digital currency traders can claim deductions for losses in the value of their holdings, and with different treatment of equity investments, this can be done instantly. Thus, traders can sell their holdings at a loss, and immediately redeem them at a lower price, thus reserving a deduction to use against capital gains.

With inventory, these types of practices require a period of 30 days before deductions can be claimed and cleared, which eliminates or significantly reduces these types of behaviors. However, since digital currency is not yet treated as stocks for tax purposes, such rules do not apply.

The Democrats’ proposals would even out that treatment, putting many more digital transfers on the table as taxable events. The proposals were not immediately dismissed by the industry, with commentators broadly accepting the measures.

In any event, they are seen as preferable to the sweeping tax changes in the Senate Infrastructure Bill, which would force a whole host of digital currency ancillary businesses to file 1,099 forms of millions of anonymous digital currency transactions, in a move widely marked across the industry as totally impractical.

While the Biden administration has reportedly said the law will not apply to non-custodial actors such as software companies and miners, there is still debate over how the bill is worded and what it is. could mean for the sector at large.

The bill is expected to pass without further amendment and is therefore expected to become law in the United States in due course. However, the digital currency industry remains concerned about the impact this could have on the sector as the government has its sights set on extracting maximum revenue.

The measures conflict with digital currencies such as BTC on a more fundamental level, with many supporters of digital currency suggesting that governments are unable or unwilling to apply this level of regulation to bitcoin. However, with the bill due to pass, it appears that these views may falter under the first test of scrutiny.

While news of the infrastructure bill has brought down many players in the digital sector, the BSV enterprise blockchain remains unaffected as a protocol. BSV was designed from the ground up to be fully compliant with the law and is responsive enough to change and grow as needed in a changing legislative environment.

Developers, transaction processors and everyone else who works within the Bitcoin SV ecosystem do this knowing that the law as it exists today and as it might be tomorrow is an imperative part of building a blockchain that works for business use cases at a global mass scale. There is no reliance on rising or falling digital currency prices, or questionable tax breaks.

While speculators with digital currencies like BTC are in panic about these pending tax changes and what they could mean for their ecosystems, it is Bitcoin SV’s infrastructural base that shields it from these. concerns. Regardless of the tax treatment of digital currency transactions, Bitcoin SV remains a stable blockchain environment for the creation and development of large-scale data solutions.

Watch: Introducing CoinGeek Zurich, BSV Blockchain: Ignite the Power of Data

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