Zusammenfassung Mit der Entscheidung des FG Niedersachsen liegt erstmals eine deutsche Finanzgerichtsentscheidung zur umsatzsteuerrechtlichen Behandlung von NFTs (Non-Fungible-Token) in Form von digitalen Bilddateien vor. Dies ist insofern zu begrĂźĂen, weil die umsatzsteuerrechtliche Behandlung von NFTs vielfältige Rechtsfragen aufwirft. Zwar nimmt das Sekretariat des Mehrwertsteuerausschusses in einem Arbeitspaper vom 21.2.2023 zu vielfältigen Rechtsfragen unverbindlich Stellung (Working Paper No. 1060, taxud.c.1(2023)1930643 - EN). Allerdings hat der Mehrwertsteuerausschuss auf Basis dieses Arbeitspapieres keine Leitlinien aufgestellt. Auch im BMF-Schreiben v. 6.3.2025 zur ertragsteuerrechtlichen Behandlung bestimmter Kryptowerte ist sowohl die ertragsteuerrechtliche als auch die umsatzsteuerrechtliche Behandlung von NFTs in Rz.5 explizit ausgenommen (BStBl. I 2025, 658). Im Folgenden wird die Entscheidung des FG Niedersachsen kurz zusammengefasst, um sich anschlieĂend mit der Rechtsfrage auseinanderzusetzen, ob der Handel von NFTs in Form von digitalen Bilddateien Ăźber NFT-Plattformen zu einer fingierten Leistungskette gem. § 3 Abs. 11a UStG zwischen NFT-Verkäufer, NFT-Plattform und NFT-Käufer fĂźhrt. Die Rechtsfrage ist insofern von Relevanz, weil NFT-Verkäufer in der Praxis regelmäĂig ein Informationsdefizit haben, den Ort der Leistung zu bestimmen - wie die Entscheidung des FG Niedersachsen einleuchtend veranschaulicht.
Cheap energy, absence of regulations on mining, low taxes, free industrial zones made Georgia an attractive place for Bitcoin mining and home to such big companies as Bitfury and Binance. This paper asks how and why Georgia become a crypto mining hub and examines crypto mining in relation to the neoliberal state and its economic development mode. This study frames crypto currency mining as a state facilitated development project, which is embedded in Washington Consensus (WC) liberalization and deregulation policies and is enabled by Wall Street Consensus (WSC) derisking policies. The paper argues that crypto currencies - once emerged on allegedly nonpolitical economic grounds to challenge the state and existing financial order - need the state and its sovereign space. The study also unfolds continuities between WC and WSC and demonstrates the destructive character of crypto mining. The paper thus challenges the claims of the crypto industry of being against the state and traditional financial system, provides insights into the political economy of Bitcoin from a peripheral country perspective and enriches ongoing debates on neoliberal derisking states.
The third Bitcoin halving that took place in May 2020 cut down the mining reward from 12.5 to 6.25 BTC per block and thus slowed down the rate of issuance of new Bitcoins, making it more scarce. The fourth and most recent halving happened in April 2024, cutting the block reward further to 3.125 BTC. If the demand did not decrease simultaneously after these halvings, then the neoclassical economic theory posits that the price of Bitcoin should have increased due to the halving. But did it, in fact, increase for that reason, or is this a post hoc fallacy? This paper uses synthetic control to construct a weighted Bitcoin that is different from its counterpart in one aspect - it did not undergo halving. Comparing the price trajectory of the actual and the simulated Bitcoins, I find evidence of a positive effect of the 2024 Bitcoin halving on its price three months later. The magnitude of this effect is one fifth of the total percentage change in the price of Bitcoin during the study period - from April 2, 2023, to July 21, 2024 (17 months). The second part of the study fails to obtain a statistically significant and robust causal estimate of the effect of the 2020 Bitcoin halving on Bitcoin's price. This is the first paper analyzing the effect of halving causally, building on the existing body of correlational research.
Abstract The global financial markets are being changed by DeFi's ability to remove central actors to facilitate peer-to-peer transactions. DeFi promotes efficiency, globalization, and economic inclusion, and at the same time, it has raised tax compliance. This study attempts to bridge the gaps by analyzing available scholarly and policy-oriented research, along with recent regulatory initiatives. The study concludes that the tax compliance challenges posed by DeFi's Decentralization, Shrouded Identity, and Composability Features are serious and can overcome the traditional tax reporting mechanisms. The study also suggests the broad directions of gaps in the literature to be addressed in policy-driven and empirical studies in the future. Keywords: DeFi, Blockchain, Tax Compliance, Fintech
Francisco von Hafe, Yash Wagle, Federico Guede-Fernåndez, Ana Paula Giordano ¡ 6 authors
Introduction The decentralised nature of blockchain technology challenges traditional legal frameworks, creating regulatory gaps in asset classification, taxation, and consumer protection. In Europe, divergent approaches, from specialised blockchain laws to adaptations of general financial legislation, hinder cross-border deployment and limit blockchainâs potential. These disparities make compliance difficult for firms and increase the risks for consumers. This study compares blockchain regulations across six European geographies: Switzerland, Liechtenstein, and Malta (blockchain-specialised regulators) versus the European Union (EU), Estonia, and Portugal (generalist regulators) to map key divergences in legal maturity, asset classification, taxation, anti-money laundering/know-your-customer enforcement, and supervisory structures. A secondary objective is to evaluate how these differences impact the scalability of innovation. Methods This study compares blockchain regulations across six European jurisdictions through a three-phase analysis. The scoping phase identified five regulatory themes and selected geographies based on maturity, innovation, and economic specialisation. Primary legal texts and policy data (2020â2025) were analysed to map convergences and divergences between blockchain-specialised and generalist regulators. Results The comparison reveals differences: blockchain-specialised geographies have dedicated Distributed Ledger Technology laws, centralised oversight, and crypto-friendly tax regimes; for example, Switzerland exempts private capital gains, and Malta offers Value Added Tax exemptions. In contrast, generalist regulators, such as the EUâs Markets in Crypto-Assets Regulation (MiCA), which theoretically harmonise rules, face inconsistent enforcement across member states. Meanwhile, Portugalâs tax exemptions and Estoniaâs rigid capital requirements create opposing market incentives. Only Liechtensteinâs Blockchain Act comprehensively regulates Decentralised Finance, whereas other geographies either adapt existing financial regulations or do not regulate it. NFTs face fragmented treatment, are excluded under MiCA, classified as securities in Estonia, and left to case-by-case analysis in Switzerland, which contributes to market uncertainty. Discussion This study reveals a tension in blockchain governance: specialised geographies demonstrate that comprehensive, tailored frameworks foster mature ecosystems. Conversely, generalist approaches struggle with fragmentation, as seen in MiCAâs uneven enforcement and Estoniaâs restrictive licensing. Yet, regulatory ambiguity carries paradoxical benefits; Portugalâs minimal rules and the EUâs transitional gaps have also fueled competitive innovation. For policymakers, these results underscore the importance of striking a balance between oversight and flexibility to foster and scale up innovation.
This paper investigated this timeless problem of tax evasion with the use of cryptocurrencies in a post-blockchain reality, in terms of legal grey zones and regulatory frameworks in various jurisdictions. Tax evaders have taken advantage of the legal grey areas, decentralized finance (DeFi) protocols, and privacy-based tools in order to hide their transactions despite the blockchain being transparent. The study used a qualitative multinational comparative research approach in which the authors have used document research and interviews with experts to examine enforcement processes in different jurisdictions including the United States, Canada, Germany, Japan, Australia and Nigeria. Conclusions were that effective statutory frameworks, high technological means of enforcement and stringent penalties were found to impact on the compliance rates positively as can be seen in Germany and Japan. Conversely, in other countries, there were high cases of non-compliance due to weakly disunity of regulation and little technological capacity, e.g., Nigeria and Canada. The introduction of DeFi became another problem since it eliminated centralized intermediaries and made the traditional tax pay reporting system more complicated. Moreover, the paper has highlighted that enforcement tactics should give due attention to enable them to balance between surveillance and privacy safeguards to keep the citizens trusty and willingly follow the law. The solution policy proposals involved integration of legal and legislative frameworks across countries globally, the integration of automated reporting solutions and investment in compliance solutions that preserve privacy. Future study on taxpayer conduct, technological breakthroughs and inter-jurisdictional cooperation to come up with resilient tax governance systems should be a matter of priority. This study added to the argument about an effective and fair establishment as an economy, as well as tax frameworks, goes digital.
Roy Kanavheti, Wellington Makondo, Wellington Simbarashe Manjoro
Academic qualification forgery poses a major concern for higher learning institutions, employers, and regulatory authorities throughout the world. In Zimbabwe, the increase in the level of fake degrees has greatly eroded trust in the education industry. Conventional verification processes are time-consuming, manual, and highly vulnerable to tampering. This paper introduces a hybrid blockchain-based and AI-enabled academic qualification verification platform to fight the problems. A prototype was implemented integrating various artificial intelligence algorithms including Convolutional Neural Networks (CNN), Autoencoder, Random Forest, and One-Class Support Vector Machines (SVM) with Algorand blockchain for secure, transparent, and decentralized record keeping. Zero-Knowledge Proofs (ZKPs) were utilized to ensure privacy. The system was tested based on a mixed-methods and Design Science Research (DSR) approach across many performance measures. Results show fraud detection accuracy, near-instantaneous verification speed, and satisfaction with privacy standards. The proposed system provides a sustainable and scalable framework for enhancing academic integrity in Zimbabwe's higher education system and primes the region for digital transformation of education.
This paper studies the existence of the long-run equilibrium relationship between the US M2 money supply (M2SL) and the price of Bitcoin (BTC) spanning January 2015 to April 2025. Utilizing a log-log model to focus on elasticity, this study employs a robust econometric methodology to examine the relationship between the US M2 money supply and Bitcoin (BTC) prices. The empirical findings confirm that the natural logarithms of M2 and BTC are integrated of order one, denoted as I (1). The Johansen test shows a long-run elasticity estimate of 2.65, suggesting that a 1% increase in the M2 money supply is associated with a 2.65% increase in the price of Bitcoin. The VECM analysis validates this long-run equilibrium, with a statistically significant error correction term (Îťâ = -0.12), indicating that 12% of any deviation from the long-run path is corrected monthly. The cointegration tests for both variables provide strong evidence of a stable, long-run relationship. These results lead us to conclude that Bitcoin performs as a highly elastic asset with respect to changes in the M2 money supply.
Digitalization is reshaping global consumption patterns and exposing the limits of value-added tax (VAT) regimes designed for an analogue economy. While Brazilian tax-reform proposals focus on merging six cascading levies into a single VAT-style tax, this structural simplification alone will not align the system with the realities of cross-border electronic commerce. Drawing on OECD guidelines and the BEPS Action 1 report, this article reviews two decades of international debate on destination-based VAT, especially for business-to-consumer supplies of intangibles. It highlights the practical impasse surrounding customer identification, jurisdictional allocation and collection in high-volume, real-time digital marketplaces. The paper argues that recent suggestions to shift liability to dominant e-commerce platforms, although politically feasible, still rely on âverified self-identificationâ and fragmented registration procedures that are ill-suited to the velocity of automated transactions. As a forward-looking alternative, the study explores how distributed-ledger technologyâparticularly smart-contract-enabled split-payment mechanisms executed on blockchain networks and settled with central-bank digital currenciesâcould embed compliance by design, enhance traceability, and lower administrative costs for both taxpayers and revenue authorities. Implementation prerequisites (digital identities, standardized e-invoicing, regulatory sandboxes) and technological hurdles (scalability, interoperability, tokenization) are mapped, providing a research agenda for a VAT 4.0 architecture. The conclusion contends that harnessing blockchainâs immutability and programmability is essential for a resilient, fraud-resistant indirect-tax system capable of addressing the borderless nature of 21st-century commerce.
The Chapter shall discuss the social implications of virtual currencies on sustainable service marketing in developing economies and, instead, analyse how digital currencies are transforming the pattern of financial inclusion, economic growth, and access to basic services, such as healthcare and education and energy. Beyond simple transactions, virtual currencies have helped provide new ways to circumvent high transaction costs, exclusion from finance, and lack of infrastructure. The new avenues to sustainable development come with the use of Central Bank Digital Currencies, decentralized finance, and blockchain technologies in virtual currencies. But still, some challenges persist in the form of digital literacy, regulatory frameworks, and robust security systems. Thus, the focus of the chapter will be on strategies for adoption, overcoming barriers, and maximizing social benefits in underserved regions toward inclusive economic growth and sustainable development.
This study seeks to offer an in-depth examination of cryptocurrency investments through the lens of Islamic law, with particular emphasis on assessing the Shariah compatibility of widely used digital assets such as Bitcoin and Ethereum. The novelty of this research lies in its systematic exploration of key issues such as the speculative nature, intrinsic value, and potential for financial harm (gharar) associated with cryptocurrencies. This study adopts a qualitative approach, drawing upon primary sources of Islamic jurisprudence namely the Quran, Hadith, and classical scholarly interpretations while also incorporating contemporary fatwas, insights from prominent Islamic finance scholars, and expert interviews to inform the analysis. The results highlight divergent viewpoints on the permissibility of cryptocurrency investments, with some scholars asserting their compliance under specific conditions, while others deem them non-compliant due to risks of speculation and uncertainty. The study concludes by proposing a set of actionable guidelines for Muslim investors, underscoring the significance of grasping the intricacies of Shariah principles in cryptocurrency investments and highlighting the necessity for continuous scholarly engagement in this evolving domain.
Charles Nicholas, Charles Dwumfour Osei, David Kwao-Sarbah
The success of decentralization efforts in developing countries, such as Ghana, is closely tied to the capacity for robust infrastructure delivery at the local level, where local governments are mandated to drive development but often operate on shoestring budgets. This study critically examines the performance of Internally Generated Funds (IGF) collection in the Ahafo Ano-South West District in Ghana, with a specific focus on revenue trends from 2016 to 2022. Using time series data, the study applies the Corrected Revenue Collection Index (CRCI) to assess how well various revenue streams performed. The findings reveal a striking pattern where property rates emerged as the most consistent and high-performing source of IGF, while revenues from land royalties and administrative fees lagged significantly. Rental income from lands and buildings, and licenses, showed moderate but promising results. These disparities highlight the untapped potential within local revenue systems and point to key areas for reform and strategic investment. By offering new empirical insights, this study contributes meaningfully to the broader discourse on local government financing and sustainable development. It underscores the urgent need for improved revenue mobilization strategies and greater fiscal accountability to empower district assemblies in Ghana and similar contexts to deliver on their developmental mandates. Strengthening IGF collection is not just a financial necessity but a pathway to stronger and more self-reliant local governance. Keywords: Revenue mobilization, Internally generated fund, District Assembly, Local Government, Decentralization, Ghana.
Since the fiscal decentralization process began in 1980, territorial inequality among the poorest and richest regions of the Mexican Republic has grown. In this work, states are divided into two groups: Those that contribute more to the federal budget than they receive and are considered fiscally surplus, and those that contribute less and are in deficit. It is shown that the fiscal deficit of the poorest states has been able to be financed through oil revenues. However, this situation is not sustainable and to maintain the current levels of transfers to the most deficient regions, it will be necessary to squeeze more from the taxpayers of the richest states. Without a new fiscal pact between the states, demands for greater autonomy in the richest regions will increase, as has recently happened in other countries.
Korean Academic Society of Taxation, Hyung Jong Na, Ji Young Kwak, Chung Hyu Shin
This study examines the current challenges within the taxation system of the Korean art market and proposes introducing an art registration system as a solution. The art market holds cultural and economic significance, and ensuring transaction transparency and a fair taxation framework is critical for building trust in the market and fostering sustainable growth. However, the existing taxation system in Korea faces various limitations, including irrational capital gains tax thresholds, excessive expense deductions, transaction opacity, and inconsistencies with international standards. Particularly, the reliance on selfďźreporting and the prevalence of informal transactions have perpetuated issues such as tax evasion and money laundering. To address these problems, this study suggests implementing an art registration system that systematically records transaction histories and clarifies ownership transfers, thereby enhancing transaction transparency and taxation effectiveness. The proposed system involves establishing stateďźled art registration offices to manage transaction records and developing a userďźfriendly online registration platform to ensure practical implementation. This system aims to prevent tax evasion, achieve tax fairness, and restore trust in the art market by recording ownership changes and transaction data. The key findings of this study are as follows. First, the art registration system can significantly enhance transaction transparency and tax fairness. Systematic management of transaction histories will establish a solid tax base, preventing tax evasion and illegal trades. Second, the system can contribute to revenue generation and strengthen national finances while reallocating collected taxes to support cultural arts and protect artists. Third, by restoring market trust and encouraging active transactions, the system can drive the sustainable development of the art market. Fourth, it will effectively combat money laundering and illicit fund transfers while laying the foundation for taxing emerging digital artworks such as NFTs (NonďźFungible Tokens). This study proposes several practical measures for successful implementation, including enacting legal frameworks, establishing art registration offices, and adopting a phased introduction. Initially, the system should focus on highďźvalue artworks to test its feasibility and effectiveness through a pilot program, followed by gradual expansion. Furthermore, this study emphasizes measures to alleviate artists' financial burdens, such as fee exemptions or reductions for the initial registration of their works, to encourage participation and ensure the systemâs stabilization. In conclusion, the art registration system presents an effective solution for enhancing transaction transparency, achieving tax fairness, and restoring trust in the art market. It also provides a robust taxation framework suitable for the digital era, particularly for emerging markets like NFTs and digital artworks. By addressing the structural challenges of the current taxation system, this system is expected to improve the international competitiveness of the Korean art market and serve as a foundation for its sustainable growth.
Purpose The purpose of this article is to critically analyse the value-added tax (VAT) levied in South Africa in respect of non-fungible token (NFT) transactions.Motivation NFTs represent a novel category of tradable digital assets that use blockchain technology. The South African Revenue Service (SARS) has not issued any guidelines on the VAT treatment of NFTs and therefore the VAT treatment is uncertain.Design/Methodology/Approach A doctrinal research methodology, which included a comparative study with other jurisdictions, was employed to critically analyse the VAT levied in respect of NFT transactions.Main findings This article found that an NFT transaction constitutes a âtaxable supplyâ and that it can constitute the âsupplyâ of âgoodsâ or âservicesâ. Although the VAT consequences of NFT transactions that constitute âgoodsâ are easily established, the VAT consequences of NFT transactions that constitute âservicesâ remain uncertain. The classification of whether the services qualify as financial services, electronic services or imported services remain uncertain.Practical implications The findings of this article accordingly suggest that legislative amendments be made to the VAT Act or that guidance be issued by SARS to clarify the VAT consequences of NFT transactions.Novelty/Contribution Academic research on the VAT treatment of NFTs is also limited. This was the first study in South Africa to critically analyse the VAT treatment of NFT transactions.
ABSTRACT Blockchain technologies have catalyzed the rise of decentralized autonomous organizations (DAOs), which operate in an incentive network fueled by crypto tokens. In essence, these tokens are imbued with either payment rights (i.e., transactional tokens) or ownership rights (i.e., governance tokens). The decentralized organizational paradigm dismantles the traditional management structure and bring new research opportunities to Operations Management (OM). While the performance of DAOs has been largely examined in current OM literature, the effectiveness of their internal incentive mechanismsâspecifically the one that uses ownership as rewards to promote user contributionsâremains unclear. Focusing on DAOâenabled virtual communities, we seek to examine whether decentralized ownership provides stronger incentives for user behaviors, such as creation and curation, in comparison to traditional monetary rewards through the lens of psychological ownership theory. We obtained data from Steemit that captures the reward, creation, curation and transaction behaviors of 98,000 users from May 2017 to April 2019. By leveraging the âpowerâupâ action as a shock that increases user ownership shares, we established a quasiâexperimental setting. Employing the PSMâDID model, we found that the use of governance tokens is associated with enhanced creation and curation efforts but declined creation novelty, compared to the use of transactional tokens. Our additional analyses further reveal that the incentive effects of governance tokens diminish over time. However, upon the recurrence of the intended choice, these effects become reinforced. Notably, we find that governance token ownership is more strongly associated with curation efforts for users with weaker social ties. Conversely, for users with high reputation scores, their content creation behaviors are less strongly associated with governance token ownership. This study contributes to the burgeoning discourse on blockchain and cryptocurrency from an operational perspective, providing valuable insights for the design of incentive mechanisms in DAOs and advancing our understanding of operational efficiencies and stakeholder engagement in decentralized structures within Operations Management.
In 2021, El Salvador declared bitcoin legal tender. According to President Nayib Bukele, the measure was intended to expand access to financial services in a country with a high proportion of unbanked people and to cheapen and ease remittance flows for migrants and their families. In this article, we inquire about the use of bitcoin as a tool for financial inclusion and contend that this policy needs to be seen in the broader context of democratic backsliding. We show that bitcoin has not translated into financial inclusion, but instead, the bitcoin law serves as a public relations tool to capture new support from like-minded constituencies, build closer relations with them, and empower international âcrypto-bros.â On the other hand, this is a tool to benefit a close circle close to the president with the use of public funds, as part of a broader historical shift of elites in El Salvador.
Abstract This chapter provides an overview of the complex interplay of taxation and Financial Technology (FinTech). International taxation has become substantially more sophisticated with the evolution of the global digital economy. This development includes the creation of virtual and online new services and activities and the construction of new FinTech and distributed ledger technology (DLT) forms of business activity. Recent efforts to address the issues concerned began with the Base Erosion and Profit Shifting Project (BEPS Project) of the Organization for Economic Cooperation and Development (OECD). The chapter explains how domestic and international taxation rules are attempting to manage the complex matters that arise concerning the digitalization of the economy and the continued rise of cryptoassets and cryptocurrencies.
This research investigates the impact of corruption on local own-source revenue at the provincial level in Indonesia during the fiscal decentralization era, highlighting its significance for economic policy and governance. The study contributes to a deeper understanding of how corruption influences economic outcomes in decentralized governance systems, posing the hypothesis that corruption may facilitate economic activities by expediting bureaucratic processes. Using secondary data from the Ministry of Finance and the Corruption Eradication Commission (KPK) of Indonesia from 2017 to 2019, the study employs descriptive statistical analysis and the Pearson correlation to examine the impact of corruption levels on local own-source revenue realization. The results reveal a strong positive and statistically significant impact, suggesting that in the short term, corruption may âgrease the wheelâ in regions with bureaucratic inefficiencies. These findings have important implications for policymakers and practitioners, emphasizing the need to balance efficient economic processes with robust anti-corruption measures. The study contributes to the existing body of knowledge by providing empirical evidence from the Indonesian context and identifying areas for further research to explore the broader impacts of corruption within fiscal decentralization frameworks.
Joseph Mamman, Muhammad Bashir Abdullahi, Oluwaseun Adeniyi Ojerinde
Background/Aim: Tax compliance remains a significant challenge for governments worldwide, as traditional VAT and income tax systems are often inefficient, prone to fraud, and administratively complex. Blockchain technology presents a potential solution by offering transparency, immutability, and decentralization, which can enhance tax compliance processes. This study explores the application of public and private blockchain configurations in tax administration, evaluating their effectiveness in fraud prevention, operational efficiency, and regulatory adaptability. The aim is to determine the comparative advantages and limitations of these blockchain models in VAT and income tax compliance and propose a framework that optimizes their integration into existing tax systems. Methods: A comparative analysis of public and private blockchain configurations was conducted, focusing on key performance metrics such as fraud reduction, cost efficiency, transparency, data privacy, and compliance accuracy. Public blockchains, such as Ethereum with IPFS, were assessed for their role in real-time invoice verification and VAT compliance, while private blockchains, such as Hyperledger Fabric, were evaluated for their secure handling of income tax data. The study also examines regulatory challenges, interoperability issues, and technological constraints affecting blockchain adoption in tax administration. Results: The findings indicate that public blockchains significantly enhance transparency and fraud detection, reducing invoice fraud by 90% and lowering administrative costs by 85%. However, their limited data privacy raises concerns for transactions involving sensitive financial information. In contrast, private blockchains prioritize data security and controlled access, ensuring 95% data privacy and 88% compliance accuracy in income tax reporting. Despite these advantages, private blockchains incur higher operational costs and require robust governance mechanisms for effective implementation. The study also identifies regulatory uncertainty, interoperability with existing tax infrastructures, scalability constraints, and technological complexity as key barriers to blockchain adoption in tax compliance. Conclusion To maximize the benefits of blockchain in tax administration, a hybrid blockchain framework is recommended, combining public blockchain transparency for VAT compliance with private blockchain security for income tax management. Policymakers must establish clear regulatory frameworks, invest in scalable digital infrastructure, and promote system interoperability to facilitate adoption. A phased implementation strategy, incorporating pilot programs, public-private partnerships, and targeted policy incentives, is crucial for a smooth transition to decentralized tax compliance. Future research should explore cross-border blockchain tax models, AI-driven fraud detection, and the economic implications of blockchain-based tax compliance to further enhance the effectiveness of this technology in global tax governance.
The approval and quick implementation of spot Bitcoin exchangetraded funds (ETFs) are a milestone in the mainstreaming of decentralized assets in conventional financial markets.Increasing market capitalization and institutional investor take-up of Bitcoin ETFs raise questions regarding their effect on market structure, liquidity, volatility, and financial system resilience.This paper investigates the differences between spot Bitcoin ETFs and conventional ETFs with respect to underlying assets, market characteristics, and regulatory complexities.Based on comparative analysis and a review of new academic literature and regulatory updates, the paper analyzes the effect of Bitcoin ETFs on market efficiency, institutional investor strategies, and crossborder regulatory responses.The findings reveal that Bitcoin ETFs enhance market accessibility, facilitate price discovery, and draw in institutional money but also increase market sensitivity and create new types of systemic risk via cross-market connectivity.This study offers an in-depth analysis of the developing role of Bitcoin ETFs and provides recommendations to regulators and institutional investors who are looking to reconcile innovation with financial resilience.
The increasing prominence of crypto asset transactions has brought their tax implications into focus. This thesis explores whether returns from Decentralized Finance (DeFi) transactions, particularly staking activities, can be classified as interest for tax purposes under South African law and international tax treaties, specifically the 2017 OECD Model Tax Convention on Income and Capital (OECD Model). A comprehensive legal analysis, supported by an exemplar, is used to determine how these innovative financial transactions align with existing legal frameworks both domestically and internationally. South Africa, consistent with other jurisdictions, does not classify crypto assets as fiat currency or legal tender. Current guidance suggests that income derived from crypto asset transactions is subject to general tax rules, potentially taxed as ordinary income or capital gains. This paper assesses whether the returns from staking crypto assets resemble interest and could trigger the application of South Africa's withholding tax on interest (WTI). Section 24J of the Income Tax Act provides a non-exhaustive list of items considered as interest in relation to financial and lending arrangements, with the underlying principal in common law being that interest is compensation for the advancement of credit. Interestingly, across the definition under section 24J and the common law definition, the mutual understanding is that interest is not confined to arise from money or currency and can take various forms in substance. Under the OECD Model, interest is similarly defined as income from debt claims, with no explicit reference to money or currency. By contrast, the UK acknowledges similarities between DeFi returns and traditional interest but maintains that interest can only arise from money or currency, thus excluding DeFi returns from being considered as interest. This thesis examines whether staking returns from DeFi can be classified as interest under Article 11 of the OECD Model and whether tax treaties can reduce or eliminate South Africa's WTI on such returns. It concludes that staking returns could potentially be taxed as interest under South African law but underlines the need for clearer regulatory guidance at both national and international levels to address the growing complexities posed by DeFi.
The rapid expansion of cryptocurrency markets has fundamentally challenged the architecture of traditional tax systems.As digital asset transactions increasingly bypass institutional oversight, national and international tax frameworks remain fragmented, reactive, and insufficient.This paper critically examines the structural, technological, and policy-driven barriers that inhibit global tax systems from effectively regulating cryptocurrency conversions, particularly the transformation of digital assets into fiat currencies.Drawing upon a comparative analysis of tax regimes across the United States, European Union, United Arab Emirates, and Singapore, this study identifies systemic inconsistencies in the classification of crypto assets, the recognition of taxable events, and the enforcement of cross-border reporting standards.The research highlights the growing prevalence of decentralized finance (DeFi) platforms, peer-to-peer exchanges, and privacy-enhancing technologies, which further complicate tax compliance and erode the ability of authorities to trace digital wealth.Using an interdisciplinary framework grounded in regulatory arbitrage theory and institutional economics, the paper explores the interplay between policy inertia, technological complexity, and jurisdictional competition.It critically assesses the limitations of emerging efforts such as the OECD's Crypto-Asset Reporting Framework (CARF) and FATF's Travel Rule, arguing that without coordinated global standards, crypto tax evasion will persist through legal voids and regulatory arbitrage.The study concludes with a set of policy imperatives for achieving equitable, technologically feasible, and internationally harmonized approaches to digital asset taxation-ensuring tax integrity without stifling innovation or violating digital privacy rights.