Biden Budget Proposal Estimates Additional $11B in Revenues by 2032 by Updating Crypto Rules

The proposal also seeks to expand the DOJ’s budget by $52 million to fight ransomware and combat the “misuse of cryptocurrency.”

AccessTimeIconMar 28, 2022 at 5:04 p.m. UTC
Updated May 11, 2023 at 4:51 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

U.S. President Joe Biden released his 2023 budget proposal on Monday, and in it, his administration is seeking to modernize rules around digital assets that it says would generate an additional $11 billion in revenues by 2032, as well as expand the Department of Justice’s ability to counter cyber threats that involve ransomware and the use of cryptocurrencies.

  • Among the digital asset rules the administration is looking to update are amending the mark-to-market rules to include digital assets; requiring reporting by certain taxpayers of foreign digital asset accounts; providing for information reporting by financial institutions and crypto brokers; and treating loans of securities as tax-free to include other asset classes and “address income inclusion.”
  • The administration estimates that modernizing these rules will bring in almost $11 billion in revenue between 2023-2032, with more than $4.8 billion coming from the first year of applying mark-to-market rules to digital assets.
  • The proposal also seeks to expand the DOJ’s budget by $52 million for “more agents, enhanced response capabilities, and strengthened intelligence collection and analysis capabilities” and noted that “These investments are in line with the Administration’s counter-ransomware strategy that emphasizes disruptive activity and combating the misuse of cryptocurrency.”
  • In the Department of the Treasury's explanations of the proposals, the mark-to-market changes would add actively traded digital assets and derivatives of these assets to a category that would be subject to such rules at the end of each year. Not all digital assets would qualify, however—only those that were determined to be regularly bought and sold for U.S. dollars or other fiat currencies, have enough volume to generate reliable valuations and have available reliable price quotes. The proposal would be effective for tax years beginning after Dec. 31, 2022.
  • As for the changes to rules for loans of digital assets, that would be updated as well. "The market for lending of financial and other assets has expanded over time to include digital assets and interests in publicly traded partnerships," the Treasury explanation report said. "The securities loan nonrecognition rules should be amended to take this expansion into account."
  • The loan rule change proposal would "amend the securities loan nonrecognition rules to provide that they apply to loans of actively traded digital assets recorded on cryptographically secured distributed ledgers, provided that the loan has terms similar to those currently required for loans of securities."

UPDATE (March 28, 2022, 17:40 UTC): Updates to include Department of Treasury comments on loans of digital assets.

UPDATE (March 28, 2022, 19:26 UTC): Updates to include Department of Treasury comments.\ on mark-to-market proposals.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Author placeholder image

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about