The US Senate approves a trillion-dollar plan with cryptocurrencies at the center

The plan is worth a trillion dollars, and has earned approval in the Senate a few days ago with a bipartisan vote of 69 yes to 30 no. But now we need to find the covers. And here comes the Ways and Means Committee, one of the highest tax authorities at the federal level, with jurisdiction over taxes, tariffs and other programs designed to generate returns for the state. A first summary report published on Monday, September 13 also puts cryptocurrencies in the committee’s crosshairs, particularly with regard to the “wash sale” rule, a fictitious form of selling that has never before been applied to crypto assets and which essentially prevents crypto assets. taxpayers to claim tax losses while maintaining an interest in the loss-making business. A regulatory vacuum that allowed cryptocurrency holders to generate tax losses (without realizing economic losses) and artificially reduce the tax bill. Under the International Revenue Code, US federal tax law, a “wash sale” occurs when an individual sells a stock or security at a loss and, within 30 days before or after this sale, buys a stock or security. “Substantially identical”, or comes into possession of a contract or option to purchase it. Currently, shares and securities are subject to the “wash sale” law, while cryptocurrencies, according to Notification 21 of 2014, are treated as property, and therefore not subject to the law in question. The law works like this. A person buys a stock for $ 2,000 and a few days later the value of that same stock drops to 1200. If he sells it and buys it back at the decreased price immediately, he cannot claim the $ 800 capital loss he suffered. But if, instead of action, there is a cryptocurrency at stake, the loss can be claimed, due to the non-application of the “wash sale” law. This loophole allows cryptocurrency holders to trade assets that act just like stocks, but subject them to the “property” tax regime, thereby claiming fictitious capital losses without being subjected to the 30-day period. it would not fall only on cryptocurrencies: they would fall within the enlargement of the rule against the wash sale “raw materials, currencies and digital assets”. The Committee’s reasoning is clear. Cryptocurrencies did not exist when congress passed the law, and it is therefore normal for references to digital assets to be absent. Closing this regulatory gap would generate the additional tax revenue needed to fund the massive infrastructure law. The burden of tracking sales will fall on exchanges, and if the Committee’s proposal is adopted, the rule will apply to all cryptocurrency exchanges after December 31, 2021.