Abstract DeFi blockchain technology, known as decentralized finance today, separates from the traditional financial ecosystem and ushers the new financial landscape onto digital platforms. In decentralized financial applications, all digital assets are safeguarded by blockchain technology. Thanks to this technology, investors can transfer their financial assets without being dependent on banking authorities. Despite the numerous advantages they bring, financial assets based on the decentralized finance ecosystem come with certain disadvantages. These assets are difficult to control, easily manipulated, and are at risk due to their vulnerability to cyberattacks. This study conducted bibliometric analyses on a total of 930 publications registered in the Web of Science (WoS) and Scopus databases using the VOSviewer program. In both databases, âall fieldsâ were filtered and scanned with the keyword âdecentralized finance.â According to the results, the Scopus database has much richer content compared to the WoS database. The most cited author in the Scopus database was Chen Y, while in the WoS database, it was Nakomoto S. There has been a significant increase in the number of publications in both databases since 2020. Additionally, it was detected that the most cited countries in both databases were the USA, China and England, respectively. It has been observed that computer science comes to the fore in the publication rankings. Decentralized finance is an interdisciplinary field of study. Therefore, many more qualified hybrid studies are needed. More studies are needed, especially examining investor behavior. The analyses presented in this article will enable researchers to grasp the bigger picture from a holistic perspective.
The exponential growth that the cryptocurrency market has seen in the past decade has caused much discomfort among governments across the globe, owing to the unregulated nature of transactions and what some may argue is a disproportionate impact of the crypto market on domestic economies. The natural response of most jurisdictions has been to tax cryptocurrency transactions so as to discourage them while also gaining revenue out of them. However, taxation policies face complex questions of determining the true nature of crypto transactions, a question that is yet to be answered with clarity. The knee-jerk reaction that the industry has attracted from the Indian government in particular has materialised in the form of imposition of a virtual digital assets tax on cryptocurrencies. The authors argue that this policy failed to effectively address its objective and only resulted in a sudden downfall of the crypto market in India, creating negative repercussions for the domestic economy. The authors then employ a game theoretical analysis to propose an alternative taxation framework that recognizes the significance of the crypto market and better balances the need for its regulation. Further, they discuss frameworks from a range of external jurisdictions to analyse the expected implications of similar policies in the Indian economy.
Local taxes with fiscal power for local authorities arte gradually being dismantled by State tax reductions which lead to the abolition of these taxes. The financing of decentralization is therefore increasingly dependent on the sharing of national tax revenues. The impossibility of local fiscal autonomy prompts a rethinking of the complex fiscal relations between the State and local authorities. The re-creation of a local fiscal power would go through consultation and co-decision between the State and the local authorities but also, in particular, with the crisis of representative democracy, through a better association of local elected representatives and citizens. However, veticality today characterizes the relationships between these actors.
Alex Berke, Tobin South, Robert Mahari, Kent Larson · 5 authors
Tax returns contain key financial information of interest to third parties: public officials are asked to share financial data for transparency, companies seek to assess the financial status of business partners, and individuals need to prove their income to landlords or to receive benefits. Tax returns also contain sensitive data such that sharing them in their entirety undermines privacy. We introduce a zero-knowledge tax disclosure system (zkTax) that allows individuals and organizations to make provable claims about select information in their tax returns without revealing additional information, which can be independently verified by third parties. The system consists of three distinct services that can be distributed: a tax authority provides tax documents signed with a public key; a Redact & Prove Service enables users to produce a redacted version of the tax documents with a zero-knowledge proof attesting the provenance of the redacted data; a Verify Service enables anyone to verify the proof. We implement a prototype with a user interface, compatible with U.S. tax forms, and demonstrate how this design could be implemented with minimal changes to existing tax infrastructure. Our system is designed to be extensible to other contexts and jurisdictions. This work provides a practical example of how distributed tools leveraging cryptography can enhance existing government or financial infrastructures, providing immediate transparency alongside privacy without system overhauls.
Decentralization holds a significant role in the context of decentralized autonomous organizations (DAOs), with its nature being not a fixed value but a comparative spectrum. Prior research investigating the measurement of decentralization in nationsâ governance system provides a foundation for our current study. This research aims to integrate these insights to define dimensions and indicators, tailored explicitly for assessing decentralization levels within DAOs. Then, the article undertakes an examination of the suitability of traditional decentralization measurement approaches within the unique DAO context, employing confirmatory factor analysis (CFA) as our analytical tool based on a total of 44 DAOs. Hence, the results suggest that DAOs have three dimensions for measuring decentralization, âpolitical decentralization as a participatory engagementâ, âeconomic decentralization as a resource distributionâ, and âadministrative decentralization as the self-governing execution of decisionsâ. By substantiating the applicability of established decentralization measurement frameworks within the unique context of DAOs, the findings not only enhance the understanding of this emergent governance paradigm but also provide DAO practitioners, policymakers, and researchers with invaluable insights.
There is a noted rise in research examining the influence of digital transformation-specifically the application of Distributed Ledger Technology (DLT) on the progression of the financial sector.This paper presents conclusions from a study on participants' awareness, understanding, and intentions regarding cryptocurrencies and the Digital Euro.Participants have a relatively high awareness of digital assets and Digital Euro, but better understanding is needed through effective communication and educational initiatives.While recognizing cryptocurrencies as valuable investments, participants are skeptical about their use for payments due to concerns about illicit activities.Regulatory frameworks are deemed important to address these concerns.Participants support the introduction of the Digital Euro and intend to use it for various purposes, suggesting potential demand.Desired characteristics include privacy, ease of use, and cross-border usability.These findings inform the strategies for introducing and accepting the Digital Euro, promoting financial inclusion, and enhancing accessibility in Europe's digital economy.
Technological innovation is transforming the provision of financial services and products in Cambodia. Payment services in particular have gone through significant evolution in recent years, through the introduction of new payment methods, platforms and interfaces. This chapter provides an overview of Cambodiaâs payment landscape, and how an efficient payment system could promote the use of local currency. This chapter draws on the real case of the Bakong payment system, which uses blockchain technology and distributed ledger technology (DLT) to leapfrog traditional technological constraints and creates interoperability between all players, addressing challenges such transaction fees, financial inclusion, and use of local currency.
Allah Ditta Nawaz, Niaz Ahmed Bhutto, Shabeer Khan
Abstract The global challenge of tax evasion presents a profound impact, leading to diminished tax revenues that are the lifeblood of a nation's seamless operations. This issue is exacerbated by the ingenious strategies employed by tax evaders, which distort economic performance benchmarks and create financial imbalances. Amidst these concerns, cryptocurrencies have emerged as a contentious subject, accused of abetting tax evasion. The covert nature of cryptocurrency transactions poses a significant hurdle for regulatory oversight and transaction recording. In response to this burgeoning concern, our comprehensive study delves into the intricate interplay between cryptocurrencies and tax evasion, utilizing annual data spanning from 2013 to 2020. With an extensive scope testing thirty two hypotheses and twelve interaction terms, our research unfurls the multifaceted dynamics at play. This study embarks by constructing a latest tax evasion index for the esteemed G-7 nations. Employing asymmetric/symmetric panel techniques, our investigation unveils a compelling revelation: cryptocurrencies exert a counteractive influence on instances of tax evasion. Furthermore, the nexus between economic performance and cryptocurrencies bears considerable sway over their correlation with tax evasion. Innovatively, our research charts the intricate relationship between tax evasion and cryptocurrencies across varying levels of economic performance. Notably, our findings underscore that Economic Freedom, Government Integrity, Government Spending, Business Freedom, Labor Freedom, Monetary Freedom, Investment Freedom, and Bureaucracy function as moderators, influencing the association between tax evasion and cryptocurrencies. These insights transcend academia, delivering significant implications to policymakers with informed guidance to devise nuanced strategies and policies.
The global backlash against tax havens has pushed secrecy-seeking capital to explore alternative opportunities in non-tax-haven countries and new financial technologies (FinTech). We identify two major corporate practicesâorganizational ring-fencing and swarmingâthat have enabled secrecy-seeking capital to adapt to new regulatory realities and illustrate these practices empirically with the extreme case of Estonia. In the 2010s, several Nordic banks turned their Estonian offices into hotbeds of high-risk transactions, ring-fencing their Baltic affiliates from their group-level systems and generating several money laundering scandals with global repercussions. More recently, secrecy-seeking capital âswarmedâ into Estoniaâs large cryptocurrency sector and thereby thwarted effective supervision of the activities of the firms involved. Neither swarming nor organizational ring-fencing have been sufficiently explained by existing approaches in International Political Economy (IPE) as new core practices of secrecy-seeking capital. We study both practices in a mixed-methods research design and provide novel empirical insights to illuminate this phenomenon. In filling this gap, our study paves the way for a second generation of global tax governance scholarship amidst the cryptocurrency and FinTech boom, and calls for a research agenda that addresses these new practices that take advantage of the lack of administrative capabilities in non-tax-haven jurisdictions.
The subject of the study is modernization of budget relations based on horizontal decentralized connections. The relevance of the study is mitigation of the shortcomings and risks in 2023, especially the tax on excess profits of previous years. The goal of the study is to develop a fundamentally different scheme for financing a part of government spending on the principles of âuberizationâ that is mutually beneficial for the state and business. The objective of the study is to improve the mechanism of the one-time fee on large business (windfall tax). The research method is the analysis of business community opinions, foreign experience, results of research work of the Department of Public Finance and the Department of Taxation and Tax Administration of the Financial University. The basic principles of building a new decentralized electronic platform are described. Specific examples of federal budget expenditures that should be âuberizedâ in the first place are considered: federal subsidies for NPOs and financing of the âKrug Dobraâ fund. The scientific novelty and practical significance of the proposed new mechanism for additional financing of public expenditures is direct connection of payers and recipients of budget subsidies on an electronic platform while preserving the control functions of the State. The conclusion is made about the practical applicability of the proposed new scheme of âuberizationâ of budgetary relations as a mechanism for collecting the one-time fee on large businesses (windfall tax), which can actually unload the federal budget, âliberatingâ it from part of expenses, without creating additional sanctions and other risks for participants.
Katherine Baer, Ruud de Mooij, Shafik Hebous, Michael Keen
Abstract Policy-makers are struggling to accommodate cryptocurrencies within tax systems not designed to handle them; this paper reviews the issues that arise. The greatest challenges are for implementation: cryptoâs pseudonymity is an inherent obstacle to third-party reporting. Design problems arise from cryptocurrenciesâ dual nature as investment assets and means of payment: more straightforward is a compelling case for corrective taxation of carbon-intensive mining. Ownership is highly concentrated at the top, but many crypto investors have only moderate incomes. The capital gains tax revenue at stake worldwide may be in the tens of billions of dollars, but the more profound risks may ultimately be for VAT/sales taxes.
As the decentralized finance industry gains traction, governments worldwide are creating or modifying legislations to regulate such financial activities. To avoid these new legislations, decentralized finance enterprises may shop for fiscally advantageous jurisdictions. This study explores global tax evasion opportunities for decentralized finance enterprises. Opportunities are identified by considering various jurisdictionsâ tax laws on cryptocurrencies along with their corporate income tax rates, corporate capital gains tax rates, level of financial development and level of cryptocurrency adoption. They are visualized with the manifold approximation and projection for dimension reduction (UMAP) technique. The study results show that there exist a substantial number of tax evasion opportunities for decentralized finance enterprises through both traditional offshore jurisdictions and crypto-advantageous jurisdictions. The latter jurisdictions are usually considered high-tax fiscal regimes; but, given that they do not apply tax laws, tax evasion opportunities arise, especially in jurisdictions that have high financial development and high cryptocurrency adoption. Further research should investigate these new opportunities and how they are evolving. Understanding the global landscape surrounding tax evasion opportunities in decentralized finance represents a first step at preventing corporate capital flight of cryptocurrencies.
As an important part of the reform process of state-owned enterprises in recent years, government decentralization has a profound impact on the business activities of state-owned enterprises. The cash holding level of state-owned enterprises is not only related to the liquidity of state-owned enterprises, but also affects the effective value of state-owned enterprises in the product market competition. Taking the A-share state-owned listed companies in Shanghai and Shenzhen stock exchanges from 2001 to 2019 as samples, the OLS model is used to empirically test the impact of the government's willingness to delegate power on the cash holding level of state-owned enterprises. The research finds that the government decentralization has a significant negative relationship with the cash holding level of state-owned enterprises. Secondly, with the help of the intermediary effect model, the study finds that the government decentralization is to relieve the financing constraints of enterprises, reduce the policy burden of state-owned enterprises, and then reduce the cash holdings of enterprises. The research conclusion not only expands the relevant literature research on the impact of government decentralization on the cash holding level of state-owned enterprises, but also provides some reference for state-owned enterprises on how to improve their governance structure and capital management system.
This research considers a new dimension of the effects of the underground sector by examining the spillovers on cryptocurrency holdings. Cryptocurrencies offer a relatively greater ability to dodge taxes and ensure the anonymity of holders, providing attractive avenues for underground operators to stash their informal-sector earnings. Our results, based on data from more than 50 nations, show that a greater prevalence of the underground economy in a nation is indeed associated with greater cryptocurrency holdings. This result holds across an alternative measure of the shadow economy, and when the bi-directional causality between the shadow economy and cryptocurrency holdings is considered. In other noteworthy findings, greater FDI crowded out cryptocurrency holdings, while greater financial globalization and greater economic uncertainty, ceteris paribus, increased them.
Abstract Canada has evolved into one of the most fiscally decentralized federations in the world. Provinces enjoy considerable autonomy and play a central role in designing and implementing economic and social policies. This chapter outlines key features of Canadian fiscal federalism, especially the extensive decentralization of legislative responsibilities and taxation powers to provincial governments, the wide-ranging intergovernmental transfer system designed to maintain fiscal balance between orders of governments and among provinces, as well as the mechanisms in place to promote some harmonization of policies and cooperation among provinces. Current challenges to Canadian fiscal federalism are outlined including pressures on horizontal and vertical fiscal balance associated with demographic changes, rapidly increasing costs in the public health care system which have been intensified by the Covid-19 pandemic, persistent tensions associated with the geographic concentration of natural resources, as well as pressures on municipal finance resulting from ongoing urbanization and growing infrastructure needs, among others.
Rafael Berriel, Eugenia Gonzalez-Aguado, Patrick J. Kehoe, Elena Pastorino
We apply ideas from fiscal federalism to reassess how fiscal authority should be delegated within a monetary union.In a real-economy model with no fiscal externalities, in which local fiscal authorities have an informational advantage about the preferences of their citizens for public spending relative to a fiscal union, a natural generalization of the classic decentralization result by Oates (1972) applies.Namely, a decentralized fiscal regime dominates a fiscal union, and the degree of dominance increases as the information of the fiscal union worsens in quality.In the presence of direct fiscal externalities across countries, however, a decentralized regime is optimal for small federations of countries, whereas a centralized regime is optimal for large ones.We then consider a monetary-economy model, in which governments finance their expenditures with nominal debt and inflation has a negative impact on aggregate productivity.If the monetary authority can commit to an inflation policy, then a version of Oates (1972)'s decentralization result holds.By contrast, when the monetary authority lacks commitment power, the resulting time-inconsistency problem generates an indirect endogenous fiscal externality.In this case, when a country-level fiscal authority chooses a higher level of nominal debt, it induces the monetary authority to inflate more to reduce the level of distortionary taxes needed to finance the higher debt.Because country-level fiscal authorities do not take into account the costs to other countries of the inflation that their fiscal policies induce, a negative fiscal externality arises.This externality naturally becomes more severe as the number of countries in the monetary union increases.Hence, as in the real-economy model, a decentralized fiscal regime is optimal for small monetary unions, whereas a fiscal union is optimal for sufficiently large ones.Our key result is that as the size of a monetary union increases, it becomes relatively more desirable to centralize fiscal authority.We conclude by discussing the implications of our results for the debate on the integration of fiscal policy within the EU and its enlargement.
The taxation of bitcoins and similar cryptoassets is of immense economic importance to the individual taxpayer and to society as a whole. In recent years, they have effectuated a number of tax law issues in Denmark. In Norway, Sweden, and Denmark, the taxation of bitcoins and similar cryptoassets is based on the general rules of tax law. This article contains a comparative analysis of the three Scandinavian countriesâ tax treatment of gains and losses on them. The analysis shows that the Norwegian and Swedish rules that have been significantly changed and modernized do not at all present the same challenges as the Danish rules. In Denmark, there is need for uniformity, predictability, and clarity to be introduced into the taxation rules. Therefore, the article also provides some reflections how to change the Danish tax legislation. Bitcoins, cryptocurrencies, cryptoassets, capital gains taxation, Danish income tax, Norwegian income tax, Swedish income tax, speculation taxation
This paper outlines the key complexities in applying traditional tax principles to proof of stake â or staking â rewards. How staking activities and rewards are characterised is fundamental to determine how a jurisdictions tax rules will ultimately apply. Core issues for taxing staking rewards surround arguments around four key interrelated themes: (i) dilution and realisation (ii) passivity and the performance of services (iii) validators and delegators and (iv) minting new tokens and transaction fees. This paper presents an exploration of some of the key tax principles relevant to staking rewards, drawing on legislation, precedent and guidance across Australia and the United States of America to exemplify the challenges therein. In doing so, this paper examines the role of the staker, the theoretical diluting effect of minting staking rewards, income characterisation and the challenges of residency and source. Such considerations highlight that the bespoke, decentralised nature of staking means that jurisdictional claims and overlaps will challenge taxpayers and tax authorities in the tax compliance function.
Decentralized Autonomous Organizations (DAOs) enable unprecedented technology-driven decentralized decision-making tools, transparent governance, and direct participation of stakeholders, making them highly adaptable to the evolving digital age. DAOs disrupt established centralized legacy models across industries. Yet, open questions and challenges for DAOs linger. Among those are the establishment of standardized governance mechanisms to ensure fairness, security, and accountability within DAOs. Additionally, scalability issues, legal frameworks, and interoperability between different DAOs are areas that require further exploration and development. The paper provides a dataset (N=[65]) analysis by assets in DAO treasuries across different industries. Descriptive statistics and data analysis show DAO industry trends and highlight governance and other shortcomings in the evolving DAO industry. The paper provides a normative analysis and outlook.