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U.S. President Joe Biden has voiced opposition to a debt ceiling deal with Republican leaders that would ostensibly benefit cryptocurrency traders. At the G7 summit, Biden reportedly called the terms proposed by the Republicans “unacceptable” during a press conference.
“I’m not going to agree to a deal that protects wealth tax scammers and cryptocurrency traders while putting food aid for nearly 1 million Americans at risk.”
The alleged protection of cryptocurrency traders relates to the collection of tax losses. According to the Washington Post, a discussion continues between the White House and Republican leaders about blocking the mechanism of cryptocurrency transactions.
Collecting tax losses from cryptocurrencies is a strategy that investors use to reduce their overall tax liability. It involves selling cryptocurrencies at a loss to offset capital gains from the profits from the cryptocurrencies. To claim a loss, assets must be sold and proceeds must be used to purchase a similar asset within 30 days before or after the sale. The mechanism is also available for shares and other assets.
Related: US Debt Ceiling Crisis: Bullish or Bearish for Bitcoin?
Along with stopping tax loss collection for cryptocurrencies, the White House presented Republicans with a similar proposal that would prevent investors from deferring taxes on real estate exchanges. Both changes will add about $40 billion in tax revenue to the US government.
Republicans are rejecting the proposals, a source told The Post. Speaker of the House Kevin McCarthy argues that the rise in U.S. debt is “a spending issue, not an income issue,” citing the Biden administration’s excessive spending during the pandemic. Meanwhile, the White House blames the debt problem on previous administrations’ tax cuts, arguing that the tax cuts have had a significant impact on revenues.
Republicans want to close the deficit with $4.8 trillion in spending cuts that will directly impact federal agency budgets. If Congress fails to raise the debt ceiling, the US could default as early as June 1. Biden will reportedly speak to McCarthy by phone during his flight from Hiroshima to Washington, D.C.
In effect since 1917, the debt ceiling is a limit set by Congress on the amount of money the federal government can borrow to pay bills.
