HMRC calls for evidence on taxation of DeFi transactions
The government is seeking views on whether its current approach to decentralised finance results in unnecessary administrative burdens. Helen Thornley examines what is at stake in the consultation process.
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Before they call for evidence on Defi, the global and local need for classification is needed, not an easy ask.
coin, token, currency, asset, commodity, securities...
SEC chairman "Cryptocurrencies like bitcoin are not securities (they are commodities)"...This includes cryptocurrencies such as Bitcoin, Ether, and Litecoin..."
Not much is truly decentralised, what is it that needs to be decentral... the token, the DeFi aspect, a DOA? What if DeFi is the name but its not actually decentralised?
"The UK Treasury in April announced plans to make the country a global crypto hub" - ok just go with option C please and apply a simple flat rate fee....
Some other countries views... maybe we should band together into some kind of European union on these type of affairs?
https://koinly.io/blog/crypto-tax-free-countries/
#brexitmeansbrexit
#itsjustabunchoftulips
Is any of the above available in English?
I know you're hip to the crypto daddio ... but some of us don't even understand your last two lines (the ones starting with a hash symbol)!
I might be interested (no promises) if I could understand what's being said.
Its a suggestion of some form of standardisation... the first hashtag is that any European standardisation would be silly for the UK to be a part of.
The issue is...
Lets say the SEC in the states classifies a token/coin.....etc etc as a security (loosely) "investors kicking in money with the intention of profiting from the efforts of the organization’s leadership"
But bitcoin is classified differently as truly decentralised with no leadership or organisation.
Lets say a firm creates a token then turns it into a DAO, (decentralized autonomous organization) separate to the organisation, but still an organisation, just owned by its members....is this now treated separately?
The issue governing bodies will have is that every body will and is treating all these things differently, and the web 3 movement will easily adapt and change way faster than any legislation, legislation that will only hurt the small investors, anyone with substantial money in the game will just move their operations for better tax purposes.... easy examples in the states is the moves to Puerto Rico.
If the UK wants to be a hub, make the tax treatments simple and attractive and competitive with others. If they don't do this, the complex nature of crypto tax will still capture some extra tax from the average Joe, but the big boys will leave and HMRC gets nothing.
The second hashtag is for the users who contribute nothing other than screaming that this entire space is just tulip mania, a pyramid scheme and a pointless scam
Interesting side note, the law commission recently published a 549 page document on digital assets / consultation paper for provisional law reform proposals.
This is good news and will help classify these things in law and is much bigger news as it could set precedent on how HMRC treat these things.
One of the main topics is that existing property laws can’t sufficiently accommodate digital assets.
Property law in England recognises two types of personal property: “Things in possession” and “Things in action” for property like company shares that can “only be claimed or enforced through legal action.”.... They are proposing the creation of a new category called “data objects”. ... will there be a new data objects Tax in the future?
Interesting (or terrifying) indeed!
Do you suppose they have the slightest idea what the term "data objects" means (and has meant for over 20 years) in the realms of IT/Computing?
They have a transient existence (and can be created/deleted by automated trigger actions - so not just without human intervention but without human knowledge).
This may turn out to be appropriate in attempting to tie down a digital economy, but sounds to me like trying to capture quicksilver in the 4th dimension via as yet undeveloped quantum 'measurements'!