US Vice President Joe Biden is not ready to sign a debt ceiling agreement to help cryptocurrency traders.
Biden spoke about the budget negotiations on the final day of the G7 summit in Japan, calling the terms by Republican leaders “unacceptable.”
“I refuse to endorse a deal that prioritizes shielding tax evaders and cryptocurrency traders over the security and welfare of nearly 1 million Americans who depend on food assistance”.
The so-called protections for cryptocurrency traders are about tax-loss harvesting, a kind of tax planning that entails selling digital currencies that have lost value to reduce capital gains taxes on other investments.
These cryptocurrencies’ sales-related capital losses can be used to offset capital gains or even lower regular income taxes by up to $3,000 annually.
In essence, the investor is using the market’s decline to their advantage by intentionally selling assets at a loss to pay less taxes.
According to the article, the White House has suggested closing a tax loophole related to cryptocurrencies and another loophole associated with real estate. These proposals were previously introduced by the administration. The cryptocurrency proposal aims to prevent investors from claiming a loss on an asset that they rapidly repurchase, a rule that already applies to stocks and other assets.
On the other hand, Republican leaders argue that the increasing debt is a result of excessive spending. They have expressed opposition to the notion of eliminating tax-loss harvesting for cryptocurrency or real estate.
The US debt increase is a “spending problem, not a revenue problem,” according to House Speaker Kevin McCarthy in March, citing the Biden administration’s extravagant spending during the pandemic.
“President Joe Biden’s budget is an irrational proposal that doubles down on the same Far Left spending policies that have caused record inflation and our current debt crisis,” said one critic.
Republicans suggest cutting $4.8 trillion in spending, which would impact government agencies’ budgets to reduce the deficit.
As President Joe Biden and congressional Republicans continue to disagree on expanding the $31.4 trillion borrowing ceiling, the US is at risk of experiencing a debt default.
Treasury Secretary Janet Yellen has cautioned that if Congress does nothing, the Treasury might run out of room to stay under the debt ceiling as early as June 1.
Especially noteworthy is that stablecoin issuer Circle has rebalanced its Treasury holdings in the face of mounting worries about a potential US government default.
The organization, the creator of the second-largest stablecoin currently in use, has chosen a combination of reserves that favors short-dated US Treasuries. This action coincides with a contentious debate about the US debt ceiling among financial experts.