Cryptocurrency tax policies are being oriented by many nations globally. Many across the planet think that the digital ecosystem is a wild west, and many also concede that it will not last for long. As the industry gains mainstream, governments are looking to introduce ordinances and tax policies.

Notably, some governments are also introducing regulations to embrace cryptos, whereas some introduce strict guidelines stymieing its adoption.

Following the gains, many crypto investors and traders commemorated 2021 as their first year when they jumped into the crypto wagon. Simultaneously, the year has also become the foremost tax season in the United States and other nations. 

Except for about ten nations, almost every country globally has introduced their tax policies on digital currencies. And now, the average investor needs to understand that cryptocurrencies are unlike fiat, and they are feted as property for tax purposes.

Cryptocurrency tax policy around the world

The introduction of cryptocurrency tax policies has scintillated many retorts across the globe. Many communities began to share memes on the same. Such digital asset taxation is evolving, and new regulations are also being implemented soon.

In the United States, the Internal Revenue Service (IRS) is considering crypto as a capital asset. The administration asks to pay taxes on any gains fetched from selling cryptocurrencies. The rate varies between 0 to 37% if any national resident sells their crypto within a year. Notably, the losses can be used to neutralize the taxed amount up to $3k in total.

In Canada, the government does not determine cryptocurrencies as fiat currency. Rather, it is assumed to be a commodity. It is noteworthy that commodities are capital assets in Canada, like stock and rental possessions. Hence, the nation is levying 15% to 33% as per the taxable income.

The United Kingdom has some different approaches in comparison to the aforementioned nations. Her Majesty's Revenue and Customs (HMRC) have elucidated that cryptocurrencies are subject to Capital Gains Tax or Income Tax. Indeed, there is no specific taxation policy for virtual currencies.

Hence, the cryptocurrency tax is conditional on the specific transaction that the residents make. Through the transaction, if someone is observed to be making an income, they will pay Income Tax. And if the transactions help make a capital gain, they will pay Capital Gains Tax.

In Australia, the government considers cryptos as an asset and entices Capital Gains Tax and Income Tax. According to the Australian Taxation Office (ATO) policy, if an inhabitant makes an acquisition, sale, or earns interest on their cryptocurrencies in the financial year, they will have to declare their totals on their Income Tax Return. However, it is noteworthy that the assets are subject to Capital Gains Tax only if the residents dispose of their assets.

The Indian government has declared that any profits from virtual digital currencies will be taxed at 30%

The aforementioned policies are a few major declarations. Simultaneously, many other nations are also working on introducing their policy or have already mandated similar guidelines with different rates. But there are a few oddities as well available that offer relaxed taxation rules for virtual assets.

Nations with relaxed cryptocurrency tax policy

While some countries are taking drastic standards with their cryptocurrency tax policies, some have introduced more indulgent approaches.

In Germany, the government assumes digital currency as a private asset and not property. Hence the nation attracts an individual Income Tax. Notably, the nation only taxes cryptocurrencies if sold within the same year it was bought.

The Portugal government has a frail outlook on digital assets. Any resident of the nation making a profit from the sales and purchases of virtual coins is not taxed on the Capital Gains. Moreover, crypto-asset exchanges for other currencies are also taxation free. Ultimately, buying and selling of digital currency would not be subject to capital gain taxes or Value-Added Tax (VAT). Hence, Portugal is a virtual tax haven for crypto.

Switzerland's revenue authorities do not classify virtual currency as a legal tender. The Swiss Federal Tax Administration (FTA) considers crypto as an asset like stock and bond. No private investors need to expend any Tax on Capital Gains. However, the gains are still subject to Income Tax or Wealth Tax. Notably, residents as an individual do not need to pay any taxes on their crypto holdings.

The Singapore government believes that the authorities should monitor the industry to safeguard their residents from laundering and other illicit activities. However, the Monetary Authority of Singapore (MAS) wants to make sure that innovative technology should not be squelched. In an interview, Sopnendu Mohanty, Chief FinTech Officer of Singapore Central Bank, highlighted that:

"The city-state's financial institutions are looking at 'allowing crypto to be an experimental construct.'"

Hence, the law there clarifies that cryptocurrency gains are exempt from capital gains tax.

The aforementioned nations were a few major examples that offered relaxed tax provisions. Such rules help the residents and businesses of these nations to embrace the digital economy and scale with innovative tech. Other nations like Cyprus, Malta, and Bermuda are also known for their lax perspective on cryptocurrency tax.

The global system is simply dictating what constitutes digital businesses within these nations. Notably, nations with simplified and relaxed rules act as a magnet for individuals and businesses as regimes for digital business.

Governments continuing to make changes in cryptocurrency tax policy

Cointelegraph, a major cryptocurrency and blockchain news outlet, has shared a report related to cryptocurrency tax. According to the report, Thomas Shea, a crypto taxation leader at EY Financial Services, considers that taxation of digital assets is an evolving area, and new statutes may be introduced soon. Additionally, he added that:

"There is new legislation that will require reporting for at least some crypto transactions, and when those rules go into effect, there will be significant changes,"

Shea heeded that as the cryptocurrencies industry gets mainstream, governments continuously explore ways to generate revenue through cryptocurrency tax. Following the scenario, Shea highlighted that:

"We're seeing certain jurisdictions develop regimes, rates and reporting unique to digital assets. In the U.S., digital assets are subject to rules and reporting typically limited to securities (and not property)."

According to the EY executive, buying digital assets with government-issued fiat and any unrealized appreciation is not a taxable event. However, peddling these assets is a taxable event. Hence he further ascribed that profits and losses are always capital in nature and are subject to taxation. Shea urged the cryptocoiners to pursue the counsel of proper advisors amid being aware of their tax obligations. He added that:

"In an industry in which technology serves as the architectural framework, having an adviser with an accompanying technology solution and understands your goals will enable you to make the best decisions possible to minimize your tax burden."

Is it worth funding our government by cryptocurrency tax policy?

While giving an outlook on the taxation strategy globally, we can say that we are funding the government with a portion of our income. For which the high-level officials make some decisions for us that we trust less than ours. Hence, we should have control over our societal contributions.

But before the intro of Web3.0, it was all unimaginable. However, the ecosystem now brings us the prospect to create a sense of community through economic strength. Ultimately, gaining control will make it fun to pay our taxes.

DAOs can give control of our societal contributions

The main motive behind the introduction of cryptocurrencies is freedom. But through means of cryptocurrency tax and other regulations, governments globally are trying to control the industry.

It is noteworthy that the industry itself has the potential to make a decentralized world. Our tax will be levied at the beginning of every year based on our income and net worth. Such an estimate could get loaded into our municipal digital currency wallet. Rather than offering our entire contribution at once for the government to relish, we can send money to unravel some significant issues and causes that are worthy.

In such a scenario, if we overspend our tax assessment, then what we really owe in taxes could be reimbursed. Ultimately, with control, we can get a synopsis of our annual contribution, which will give the satisfaction that our funds have been used for the righteousness of our society and we are earning some community perks.

If we start to focus on particular causes, our neighborhood's problems and corresponding solutions could smoothly be measurable and instantly be gratified. Notably, as the local crises begin to operate at such a pace, it will create a sense of community.

We will see disruption of lags and blunders. Neighborhoods in which we raise our family and go to work will become insulated from higher-level authorities' asymmetric information and red tape.

These all ideations sound like a Decentralized Autonomous Organization (DAO), which is doable because of the introduction of blockchain technology and Web3.0. DAO will aid us to solve issues with our funds for only worthy causes if we feel like we can delegate our tax spending power to a friend or a family member whose decisions are reliable.


DAOs are one probable instantiation of liquid taxation. It is time to understand how the management we choose is endeavoring to control us only. Social resilience and economic efficiency are the two pillars of liberal democracy globally. 

The world has rigid and flexible cryptocurrency tax policies. But why do we ought that when the ecosystem brings an opportunity to make public governance and funding equitable and amusing. We need to embrace liquid taxation to make our society liberal and democratic.