Taxation of Cryptoassets and Web 3.0

Abstract

The advent of Web 3.0 is accompanied by the growing popularity of blockchain, cryptoassets, and various on-chain economic activities. Decentralized blockchain technology not only creates a thriving cryptoassets market, generating enormous wealth due to investors’ enthusiasm for cryptocurrencies, but also presents significant challenges for tax administration due to its unique features of decentralized control, anonymity, valuation volatility, and hybrid characteristics. In recent years, while many jurisdictions have issued tax regulations or guidance to help investors understand their tax obligations related to cryptoassets, there is no universally adopted approach to taxing cryptoassets. This chapter discusses the taxation of cryptoassets by examining the taxability of cryptocurrencies and exploring the tax implications of the metaverse and decentralized finance. Additionally, this chapter provides an overview of the latest developments in information reporting concerning cryptoassets.