Many nations are now try really hard to considering what to do about crypto stock markets (CC’s), as they don’t want to miss out on tax revenue, and to varying degrees they think they need to regulate forex space for the health of consumer protection. Knowing that there are scams and frequency of hacking Crypto and robbery, it is good that consumer protection is being thought of at these levels. The Sec Exchange Commission (SEC) happened in america for only such a purpose and the SEC has recently put some regulations in place for CC Transactions and transactions. Other nations have similar regulatory bodies and most of them will work away at devising appropriate regulations, and it is likely that the “rules” will be dynamic for a few years, as governments uncover what successful and what does not. Some of the benefits of CC’s are that they are NOT controlled by any government or Central Bank, so it could be an interesting tug-of-war for many years to see how much regulation and control will be charged by governments.
The bigger concern for most governments is the potential for increasing revenue by difficult the gains being generated in the CC market space. The central question being addressed is whether to treat CC’s as an investment or as a currency. Most governments so far lean towards treating CC’s as an investment, like every other item where profits are taxed using a Capital Gains model. Some governments view CC’s only as a currency that changes in daily relative value, and they’ll use taxation rules similar to foreign exchange investments and transactions. It is interesting that Germany has straddled the fencing here, deciding that CC’s used directly for purchasing goods or services are not taxable. It seems a bit disorderly and unworkable if all our investment profits could be non-taxable if we used them to directly buy something — say a new car — from time to time. Perhaps Germany will fine tune their policy or re-think it as they go along.
It is also more difficult for governments to put in force taxation rules given that there are no consistent global laws requiring CC Transactions to report CC transactions to government. The global and distributed nature of the CC marketplace makes it almost impossible for any one nation to know about all the transactions of their citizens. Tax evasion already happens, as there are several countries offering global banking services that are often used as tax havens, sheltering funds from taxation. By there very nature CC’s were born into a realm of scant regulation and control by governments, and that has both upsides and negative aspects. It should take time for governments to work through all this by learning from mistakes — it is still all new and it is why we tout CC’s and Blockchain technology as “game changers”.