Debunking Biden’s Claims on Crypto Tax Loopholes: Reality Check and Community Reactions

President Biden’s Infographic Sparking Controversy

In a recent Twitter post, President Joe Biden raised eyebrows with an infographic highlighting his call to eliminate certain “tax loopholes” that he claims benefit wealthy cryptocurrency investors. However, despite stating that such measures might save the government a whopping $18 billion, the lack of specifics left many scratching their heads. What exactly are these loopholes? Are they even real?

Community Responds: Does Anyone Know the Facts?

The crypto community didn’t hold back in their replies to Biden’s tweet. Pseudonymous crypto researcher FatMan chimed in, declaring that the president’s facts were a tad fishy. Citing the staggering $1.4 trillion drop in the crypto market last year compared to the corporate profit pool of $11.8 trillion, FatMan asked rhetorically where these so-called loopholes actually lay.

“The crypto market is both much smaller & fell heavily. We both know where the loopholes really are,” FatMan tweeted.

Dogecoin’s Co-founder Weighs In

Adding to the discourse, Dogecoin co-founder Billy Markus questioned the president on the specifics of these loopholes. With a hint of sarcasm and frustration, he noted that he had actually paid more to the government than he had made through crypto dealings. Markus emphasized that the majority of American crypto users aren’t the moneyed elite, but rather individuals just trying to make ends meet in a tough economy.

Frustration Over Funding from FTX’s Former CEO

As if the discussion couldn’t get any spicier, a community member attacked the Biden administration for its alleged funding ties to Sam Bankman-Fried, the former CEO of collapsed crypto exchange FTX. They pointedly asked the president to return the funds received from FTX, adding a personal touch to their frustration by saying, “Give back the money!”

Possible Tax Loophole Theories

What kind of tax loopholes could Biden possibly be referring to? Reddit users have theorized that it may relate to the Internal Revenue Service (IRS) wash sale rule. This rule prohibits taxpayers from selling securities at a loss and then reacquiring them within a 30-day window — a rule that’s seemingly not yet applied to cryptocurrencies.

For instance, MicroStrategy’s decision to sell Bitcoin in December 2022 is a classic case of tax-loss harvesting, a strategy where investors offload digital assets at a loss to minimize capital gains tax. MicroStrategy sold 704 BTC at an average price of $16,776 each. If these loopholes are truly on the table, one must ask: who really stands to gain the most?