Classification of Cryptocurrencies in Different Countries

The complicated nature of cryptocurrencies continues to make investing in them confusing, and depending on where you are, you may be facing different tax obligations for it. This is something marketers and business owners especially need to consider when establishing their crypto business.

Here are some asset classes that cryptocurrencies fall under, depending on where you set up shop:

Security

In the United States, where there is no developed clear regulatory framework for cryptocurrencies just yet, it can be considered a security according to the Securities and Exchange Commission.

Commodity

According to the Commodity Futures Trading Commission (CFTC), Bitcoin is considered a commodity. In Canada, cryptocurrencies are also treated much like commodities.

Property

In the United Kingdom, cryptocurrency is considered a property but not a legal tender. The same is true for Singapore, which is also known as a safe haven for cryptocurrency. In the United States, the IRS also classifies crypto as a property when considering federal income.

Meanwhile, Japan classifies crypto as legal property, as directed by the Payment Services Act. Australia also considers it as legal property, meaning it is subject to capital gains tax. The United Kingdom, as well as the European Union, also implements know-your-customer (KYC) measures specific to digital currencies for added security.

Currency

The U.S. Treasury considers Bitcoin as a currency. Anyone who will go into blockchain marketing needs to know the difference between currencies and legal tenders before establishing their business plan.

Not Legal Tender

For places like South Korea and India, cryptocurrencies are not considered legal tender. This means that in South Korea, they avoid capital gains tax. However, crypto exchanges and virtual asset service providers are required to register with the Korean Financial Intelligence Unit. For India, there is a requirement to pay taxes on crypto trading profits, according to the Central Board of Direct Taxation.

Now that you know the different ways cryptocurrencies are treated in different parts of the world, consider where to position your business and know the tax implications, as well as the rules and regulations to follow before you start business operations.

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