Hong Kong Set to Tax Crypto as Property
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Hong Kong is looking to implement digital currency regulations. It recently took its first step in doing so by deciding (and taking a page out of the U.S. taxation book) that all crypto will be taxed as property and not money.
Hong Kong Changes Its Thoughts on Crypto
This is very similar to how crypto is taxed in the United States. Organizations like the Internal Revenue Service (IRS) do not look at crypto transactions as exchanges of money. Rather, they are exchanges of property, meaning selling crypto ultimately subjects the person to capital gains taxes or capital losses depending on if they sell their assets higher or lower than when they first purchased or received them.
This is somewhat of a problem because Hong Kong, like the U.S., is refusing to see digital currency for what it is: legitimate and actual money. What many people likely forget is that while bitcoin and many of its crypto cousins have taken on either speculative or even hedge-like statuses in recent years, many of them were initially designed to serve as payment tools. They were built to push checks, credit cards, and fiat currencies to the side, but this has been a relatively slow journey given the volatility that continues to drag them down.
Despite this volatility, however, crypto was – and always has been – designed to serve as money, so the idea that a region as advanced and as forward-thinking as Hong Kong refuses to take such initiative is disappointing to say the least.
Still, some analysts are viewing this maneuver as a solid step forward given Hong Kong served as the home of Gatecoin Limited, a crypto exchange that ultimately fell apart roughly four years after it was first introduced to the world in 2015.
The collapse of the digital currency platform and the subsequent legal matters it was involved in are what are ultimately considered to have contributed to the prevention of Hong Kong even recognizing crypto either as money or property, and many fans are lauding regulators for at least being able to step beyond their initial biases.
FTX Boosted Regulatory Calls
The calls for crypto regulation have been increasing over the past six months following the collapse of digital currency platform FTX. The company – which first rose to fame in the year 2019 – became one of the top five crypto exchanges within three years and its founder and chief executive Sam Bankman-Fried was considered a genius by many, but that reputation didn’t last long.
SBF is presently awaiting trial at his parents’ house in Northern California. It is believed that he used customer funds to potentially invest in luxury Bahamian real estate. It is also thought that he used the money to pay off loans taken out by his other company Alameda Research.
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