Taxing crypto-currency

Is it possible to devise an effective tax regime for the emerging asset class?

The hype around digital assets, especially crypto currency is on the rise as people are embracing the new asset class with an unprecedented enthusiasm. The speculative nature of the said assets is still not deterring investors from pouring in the money. A proof of it is the fact that last year in November, the crypto market capitalization reached $3 trillion as reported by Bloomberg. 

The article further states, “The little more than a decade old market for digital assets has already roughly quadrupled from its 2020 year-end value, as investors have gotten more comfortable with established tokens such as Bitcoin and networks like Ethereum and Solana continue to upgrade and attract new functionality.”  

However, given that it has emerged as a parallel asset class, legislators around the globe have started debating on devising a tax system to bring the gains from blockchain based financial products into the tax net and prevent it from becoming a tax haven. Pakistan, on the other hand, still hasn’t officially recognised crypto as an asset class, partially due to fears of it being used for illicit activities leading to repercussions, FATF sanctions being one of them.

 

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Note: Access to the full article is limited to paid subscribers only. If you are already a paid subscriber, please Otherwise, you can choose to purchase a subscription package below for as low as Rs 275/month:

 

Ahtasam Ahmad
The author works as a Sector Analyst at Profit and can be reached at [email protected]

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