How China could legalize crypto in its efforts to tax cryptocurrency firms and individuals


Share:
  • China’s local tax authorities have begun to impose a 20% personal income tax on the investment profits of individual crypto investors and Bitcoin miners. 
  • Within the current legal framework, China does not prohibit individuals from holding Bitcoin and cryptocurrencies under the invalid civil act. 
  • Experts argue that the need to tax cryptocurrencies may have the potential to force the legalization of the crypto industry in China.

Chinese journalist Colin Wu reported Chinese authorities’ efforts to tax cryptocurrency firms and individuals. Experts believe that in an attempt to control the collection of crypto taxes, China could legalize crypto. 

Also read: Whales chase AAVE for massive gains, the Ethereum-based protocol token could rally on one condition

China’s tax authorities impose 20% personal income tax on cryptocurrency profits

Colin Wu reported that local tax authorities in China have begun imposing a 20% personal income tax on the investment profits of individual crypto investors and Bitcoin miners. China currently has strict regulations on illegal financial activities in the form of virtual currencies. However, based on the current situation, holding Bitcoin and cryptocurrencies in the portfolio is not explicitly prohibited by the law. 

Cryptocurrency-related activities are not legal in China. This poses a challenge for taxation. As of early 2008, there were a lot of discussions around virtual tokens on online forums and games. Wu reported that experts are of the opinion that the need to tax cryptocurrencies may have the potential to force the legalization of the crypto industry in China.

While the Chinese government has been cracking down on cryptocurrency trading and mining, there are indications that they consider legalization and regulation of crypto to gain more control and collect taxes. Cryptocurrency-related activities are not legal, however this poses a problem for taxation and similar discussions have taken place as early as 2008. 

In October 2021, China Tax News, a subsidiary of the State Administration of Taxation, published an article “Preventing Tax Risks from Virtual Currencies.” This represents the stance of tax authorities on digital assets and their taxation. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

China coin narrative in play as Coinbase CEO warns of restrictive US crypto policies

China coin narrative in play as Coinbase CEO warns of restrictive US crypto policies

Brian Armstrong, CEO and co-founder of cryptocurrency platform Coinbase, shared his thoughts on restrictive US crypto policies in an opinion editorial published by Market Watch on Tuesday.

More Cryptocurrencies News

Ethereum holders pull $1 billion in ETH off exchanges hinting retail-led rally

Ethereum holders pull $1 billion in ETH off exchanges hinting retail-led rally

Ethereum holdings in exchange wallets declined by $1.04 billion between May 8 and May 31. Interestingly, while large wallet investors have shed their Ether holdings, the altcoin got redistributed to addresses with less than 1 ETH.

More Ethereum News

Dogecoin price action hints DOGE can reverse its bearish trend

Dogecoin price action hints DOGE can reverse its bearish trend

Dogecoin (DOGE) price presents a potential for trend reversal provided a certain set of conditions are met. These conditions involve overcoming key hurdles for DOGE bulls and seeing momentum indicators flip bullish on lower time frames.

More Dogecoin News

PEPE price to drop another 15% as altcoin winter is only halfway finished

PEPE price to drop another 15% as altcoin winter is only halfway finished

PEPE price is feeling the frost and cold of the altcoin winter that continues with some notable slides in price valuation in the altcoin space. After price action dropped below $0.0014700, traders must have understood that a turnaround would only occur at a high supportive level.

More PEPE News

Bitcoin: BTC delays inevitable crash to $25,000

Bitcoin: BTC delays inevitable crash to $25,000

Bitcoin price is delaying a crash that has been brewing for roughly two weeks. A failure to push higher could result in a steep correction next week. The troubling macroeconomic conditions could be key in catalyzing and trigger a nosedive for BTC holders.

Read full analysis

BTC

ETH

XRP