Jim Chalmers, Stephen Jones: Crypto not taxed as a foreign currency
The Australian government has made a major announcement on cryptocurrencies following a major decision on how to treat Bitcoin abroad.
The Australian government has confirmed that cryptocurrencies will remain exempt from foreign currency tax regimes following a major announcement abroad.
The decision follows a move by El Salvador to allow Bitcoin as legal tender.
Treasurer Jim Chalmers and Deputy Treasurer Stephen Jones said the decision has the potential to create uncertainty about the status of Bitcoin and other crypto assets for tax purposes in Australia.
The government will enact current tax regimes, meaning crypto assets will not be considered foreign currency for tax purposes in Australia.
Capital gains tax will continue to be levied on crypto assets held as investments.
The legal changes apply retrospectively to July 1 of the previous year.
“This provides reassurance and clarity at a time of volatility for cryptocurrencies,” said Mr. Chalmers and Mr. Jones.
“The government will continue to take a pragmatic and timely approach to its role in the rapidly evolving digital currency landscape.”
It’s been a nightmare for cryptocurrency investors for a few months, with billions wiped out from the markets.
But there are warnings it’s about to get a lot worse.
The crypto winter has now turned into a “polar maelstrom,” an executive at one of the world’s largest banks said in a candid admission this week.
Throughout the year, the cryptocurrency has seen a bear run.
However, things took a turn for the worse last weekend as investors panicked after the US Federal Reserve hiked interest rates by 75 basis points.
It sparked fears of a global recession, and crypto investors quickly retreated, prompting mass selling and a drastic price drop for some of the world’s top blockchains.
Bitcoin plunged below $20,000 on Saturday, its lowest level since December 13, 2020.
Global stock markets fell this week amid fears that inflation-fighting rate hikes by the US Federal Reserve and other central banks could trigger a recession.
Cryptocurrencies have paid the biggest price.
Bitcoin’s fall was accelerated by the suspension of payouts by two cryptocurrency platforms.
The Celsius Network said it was pausing “all withdrawals, swaps and transfers between accounts” due to “extreme market conditions.” Babel Finance said it was facing “unusual liquidity pressures”. Major exchange Binance temporarily suspended bitcoin withdrawals and advised customers to use other networks.
Coinbase announced on Monday that it was shedding 18 percent of its workforce, about 1,100 jobs, citing tight economic conditions and an overly rapid expansion.
“We appear to be entering a recession after more than 10 years of economic boom,” said Brian Armstrong, Founder and CEO of Coinbase.
In recent years, the crypto sector has benefited from a huge influx of money due to the easy money policies of the world’s largest central banks.
However, rampant inflation has prompted tighter monetary policies around the world and helped to crash the industry.
– With AFP