Difficulties in Achieving Neutrality and Other Challenges in Taxing Cryptoassets
The recent volatility in cryptoassets prices—booming to almost USD 800 billion in estimated market capitalization early 2018 only to collapse to about a quarter of that value by the time of writing—has generated strong interest from governments and tax administrations in considering the appropriate tax treatment of transactions in, and relevant gains derived by taxpayers from the acquisition and disposal of, cryptoassets. This chapter provides an overview of the main challenges and key considerations for tax law policymakers wishing to design or benchmark their tax law framework for cryptoassets. It is organized as follows: The second section discusses the classification challenges that tax law policymakers and tax administrations typically face in relation to cryptoassets. The third section proceeds to discuss some of the key tax law considerations when considering basic forms of activities and transactions with respect to cryptoasset. The fourth section draws some preliminary conclusions.