New Developments in Crypto Taxation Wordwide

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By A D

As the adoption of cryptocurrency goes global, the onslaught of regulations and taxations is imminent.

Cryptocurrencies have garnered a lot of attention, good and bad, in the last decade. Governments and concerned authorities all around the world have kept a watch as well, now delving more into the dynamics of it. The growing use of crypto has raised concern about the lack of clarity regarding regulation and taxes. While many countries have developed a regulatory framework for these digital assets, others are still in the process of doing so. Some countries have embraced crypto, recognizing their potential and promoting their development. Other countries have taken a more cautious approach, concerned about the potential risks.

Read: Cryptocurrency Regulations: What You Need to Know

Along with regulations, taxation frameworks have been a much debated topic in the crypto space. Recent moves by national governments in countries around the world give an insight into the perspective of the authorities on cryptocurrency development.

Italy’s 26% Taxation on Crypto Trading

Italy has cralified crypto taxation in its 2023 expansionary budget, wherein 21 billion euros have been dedicated to tax breaks. The government has imposed a 26% tax on gains from cryptocurrency trading. The rules apply to both residents and non-residents who conduct transactions in the country that exceed 2000 euros in one taxation period. In addition, crypto exchanges and custodians must report user data to Italy’s tax agency. The decree is aimed atnpreventing tax evasion and improve tax compliance.

Although crypto remains moostly unregulated in Italy, the budget details crypto as “a digital representation of value or rights, which can be transferred and stored electronically, using the technology of distributed ledger or similar technology”. As MiCA picks up pace with crypto regultions in the European Union, Italy’s move indicates towards a better regulatory scenario in the country.

Kenya’s 1.5% Tax on Crypto Companies

The Kenyan government recently imposed a 1.5% taxation on the gross transaction value of crypto exchanges and other digital assets companies. The tax implies to all income generated from cryptocurrency-related activites, including trading, mining, and investing. In a recent bill, the government proposes 3% tax on transfer or value of digital asset.

More than 10% of the population in Kenya own cryptocurrency, placing it 19th on the most significant crypto adoption of 2022. Bitcoin mining has been a major development in the country, with foreign players and as well as local initiatives taking it up a notch.

Biden Proposes Climate Change Tax on Crypto Mining

The White House has proposed 30% tax on crypto mining function as a part of the U.S. government’s efforts to combat climate change. The DAME (Digital Asset Mining Energy) tax would apply to mining operations that consume a significant amount of energy, such as proof-of-work (PoW) algorithms, on the amount of electricity they use. This move is not only going to bring in revenue to the government, estimated to be $3.5 billion in a decade, but also encourage sustainable and energy efficient mining practices and decrease carbon emissions.

As the widespread of cryptocurrency expands, more regulations and frameworks are not off the table. Infact, new developments in the regulation segment could bring more scope for innovation and secure operations. With more nations weighing in and contributing, the skepticism around crypto is sure to slowly fade.

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