- G-20 classifies cryptocurrencies as an asset, not currencies.
- Asset definition means cryptocurrencies holder would pay more taxes.
Crypto news: The G-20 – a group of 20 finance ministers and central bank governors – are currently holding a discussion in Buenos Aires which seeks to crackdown on tax evasion on cryptocurrencies like Bitcoin. The G-20 ministers are moving to an agreement that cryptocurrencies aren’t currencies after all, but assets. This means trades in cryptocurrencies could potentially be subject to capital gains tax.
As stated in a draft G-20 communique, cryptocurrencies “lack the traits of sovereign currencies.” The G-20 ministers are scheduled to discuss the issue in full later today, Tuesday.
The president of De Nederlandsche Bank NV, who is also the chairman of the Financial Stability Board’s standard committee on the assessment of vulnerabilities, Klaas Knot, said:
“Whether you call it crypto assets, crypto tokens — definitely not cryptocurrencies — let that be clear a message as far as I’m concerned. I don’t think any of these cryptos satisfy the three roles money plays in an economy.”
This issue is already posing a problem in the US. According to Credit Karma Inc., only a small fraction of the US citizens is reporting their cryptocurrency deals to the Internal Revenue Service, and not more than 100 of the first 250,000 federal tax returns filed as of Feb. 2018 contained a declaration related to cryptocurrency losses and gains.
The chairman of the Financial Stability Board and Governor of Bank of England, Mark Carney, on Sunday warned that the rapid growth of cryptocurrencies such as Bitcoin might someday make them a threat to the financial system.
This G-20 consensus is similar to the content of an official report released by the Israel Tax Authority (ITA) last month stating than cryptocurrencies are assets and not currencies when it comes to taxation matters.
Below are some comments and developments on the cryptocurrencies issues over the past week:
- Donald Trump, the US President, signed an executive order to prohibit US purchases of Petro – the cryptocurrency that Venezuela is rolling out, as part of a campaign to pressure President Nicolas Maduro’s government.
- Ilan Goldfajn, the President of central bank of Brazil, said during the G-20 discussion: “Cryptos lack the stability and ease of payment that characterize currencies. It’s more of a token asset than a currency.”
- Haruhiko Kuroda, the Governor of Bank of Japan said: “It’s very important to consider consumer and investor protection and how to prevent inappropriate trading such as money laundering. On the other hand, new technology like blockchain can have a positive effect.”
- Bruno Le Maire, the Finance Minister for France, also stated at the G-20 discussion: “Crypto is more an asset than a currency. If we want to move on and protect citizens from any kind of speculations or money laundering or terrorism financing, we need rules.”
- Ahmed Alkholifey, the Governor of Saudi Arabian Monetary Authority, stated at the IIF Conference: “The first function of a currency is to serve as a stable medium of exchange, and experience today with various crypto assets in circulation are not at all satisfactory in this regard.”
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