A Tax Regulatory Framework for Cryptographic Assets

Abstract

We propose to develop a novel regulatory framework for taxing cryptographic assets. Most tax systems apply the realization principle for taxing cryptographic assets even though such a deferral is regressive, increases capital inequality, decreases governmental tax receipts, and incentivizes taxpayers not to sell or exchange their cryptographic assets and avoid being taxed on any such capital appreciation along with concealing such assets since the taxpayer is not subject to any reporting obligations. The application of the realization principle is clearly unjustifiable in this context, and in order to depart from it, a novel tax framework has to be adopted.

Keywords: Cryptographic Assets, Tax, regulation