Bitcoin regains $30,000 despite Biden saying he wants to close the tax loophole

During a speech in Chicago where he laid out his economic plan, Biden took aim at crypto traders along with other financial figures, saying he wanted to make the economy and tax system fairer by eliminating opportunities for crypto traders to evade taxes.

“We’re going to make it fair by eliminating loopholes for crypto traders, hedge fund managers,” Biden said, according to a transcript released by the White House.

Biden just said:

We’re going to make the economy fairer by getting rid of tax loopholes for crypto traders and hedge fund managers. pic.twitter.com/vWRlVDPDSE

— Quiver Quantitative (@QuiverQuant) June 28, 2023

Following Biden’s comments on Wednesday, Bitcoin, which makes up more than half of the crypto market, fell 1.3% to just under $30,000. But on Thursday morning, investors shook off any skittishness, pushing Bitcoin up as high as $30,772 before it retreated to about $30,500, according to CoinMarketCap. 

Biden had previously mentioned wanting to close crypto loopholes in May when his official Twitter account tweeted that Congress should close “tax loopholes that help wealthy crypto investors,” which the tweet estimated at about $18 billion in lost tax revenue.

The crypto “loophole” in question likely refers to the fact that, unlike with traditional equities, traders can sell and repurchase cryptocurrency within short windows without incurring a higher tax rate.

Biden’s appointee to the Securities and Exchange Commission, Chairman Gary Gensler, has also increasingly cracked down on digital assets. Earlier this month the SEC filed lawsuits against crypto exchanges Binance and Coinbase for offering unregistered securities. 

The increasing scrutiny from regulators did not stop Bitcoin from hitting a 52-week high above $31,000 last week on the back of BlackRock’s application for a spot Bitcoin ETF. Several other firms like WisdomTree and Invesco followed BlackRock in applying for a spot Bitcoin ETF, and on Tuesday, The Block reported that Fidelity would soon file for its own. 
Last week also saw nearly $200 million worth of inflows pour into digital asset investment products—the highest weekly inflows in nearly a year, according to a report by CoinShares.