Besides the Clarity Act, the White House’s 2026 budget proposal targets the wash sale loophole that lets crypto traders harvest losses and immediately rebuy. It’s an illegal practice for stock investors, but entirely legal under current digital asset rules.The proposal would apply wash sale rules to crypto for the first time, treating digital assets the same as traditional securities for tax purposes. It also includes a 30% excise tax on electricity used for crypto mining via the DAME (Digital Asset Mining Energy) tax, and a FATCA reporting requirement for U.S. taxpayers holding more than $50,000 in foreign crypto accounts.Key Takeaways White House Budget 2026 proposes applying wash sale rules to crypto, closing a loophole unavailable to equity traders Treasury estimates the change generates $5.4 billion in revenue over 10 years A 30% Mining Tax on electricity costs targets proof-of-work operations directly FATCA reporting would extend to foreign crypto accounts over $50,000 The proposal faces a difficult legislative path in a Congress that has been moving toward pro-crypto regulation What the Wash Sale Rule DoesUnder current law, the wash sale rule blocks stock investors from claiming a tax loss if they repurchase the same or substantially identical security within 30 days. Crypto is classified as property, not a security, which means that the rule does not apply. Traders have used this gap aggressively, selling a Bitcoin position at a loss to lock in a deduction, then rebuying immediately to maintain exposure. That is tax-loss harvesting, and for crypto holders, it has been completely legal. Wash Trading: Exchange buys asset liquidating its short order book, exchange sells asset liquidating its long order book. Repeat until regulated.Example: Binance and Co can buy and sell the same block of Bitcoin over and over again for whatever price they need to liquidate…— MartyParty (@martypartymusic) April 28, 2026 The White House proposal closes this gap. If passed, crypto would be subject to the same 30-day restriction as equities. Discover: The best crypto to diversify your portfolio withDoes This Proposal Have a Real Path Through Congress, Just Like the Clarity Act?The political tension here is direct. The same White House that is pushing the CLARITY Act as a pro-crypto regulatory framework is simultaneously proposing crypto tax rules. That is not a contradiction to the administration; it frames the crypto tax proposal as parity, not punishment. It just lands differently on the Hill. This is happening right now in WashingtonA new crypto tax framework could:• Kill tax loss harvesting• Tax gains you have not sold• Expand IRS visibility into DeFiIf you are not planning ahead, you are behind#CryptoTax #DigitalAssets #TaxCompliance #CryptoRegulation… pic.twitter.com/U5MLDZNVBe— Gordon Law Group | Crypto Tax Lawyer (@gordonlawltd) April 28, 2026 Congress is currently moving toward crypto-friendly legislation. The CLARITY Act debate in the Senate Banking Committee is already consuming legislative bandwidth, and a crypto tax crackdown runs against the grain of that momentum. The SEC is simultaneously fielding major regulatory proposals, including an 85-item rule change affecting Bitcoin and XRP ETF listings, and crypto policy is being pulled in multiple directions at once.To put this into perspective, similar wash sale proposals were floated during the Obama and Biden administrations and never cleared Congress. Discover: The best pre-launch token salesThe post Clarity Act and Crypto Tax Loophole: White House Billions Dollar Proposal appeared first on Cryptonews.

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