Sputnik: Tax season is coming up in the US, perhaps, in some other countries as well, and it's interesting that cryptocurrencies have long been associated with the dark web, criminals, everything underground, illegal, etc. Are cryptocurrencies like offshores, or are they just outright tax havens? Can they really be tracked; is it possible to tax cryptocurrencies?
Mati Greenspan: I think that the stigma that cryptocurrencies are used primarily for illicit activities is being broken at the moment. In fact, research shows that the very few transactions that happen on the cryptocurrencies are illegal and most cryptocurrencies are actually not completely anonymous, Bitcoin is pseudo-anonymous, so if anybody knows your public key or your wallet ID, they can actually see all of your transactions, previous transactions. In this case most criminals would probably prefer to use cash rather than cryptocurrencies.
Sputnik: Many countries are actually confused how to consider, for the sake of taxation, cryptocurrencies: are they commodities, are they a currency, are they an asset? What are they? Some countries are not taxing them because of this, others are still thinking how to do this… What do you think cryptocurrency is, how would you classify them?
Mati Greenspan: This is something that at the end of the day is going to be region specific, so it really depends where you are. Japan has declared Bitcon to be a legal currency, whereas the Unites States is leaning more towards commodity or assets. It has to be noted that there's a lot of different types of cryptocurrencies out there, the Swiss has put together a very comprehensive guide to define them and it basically named three classifications for different cryptocurrencies: number one is going to be a money coin, currencies that can be used as a means of exchange and a store of value, like Bitcoin or Bitcoin Cash; utility tokens, like Ethereum are to be used within a specific application or framework; and then you have securities, which act more as stocks, which entitle you to either a percentage of the company's profits or voting rights within the company or something like this. I believe going forward, there's going to be a lot of knowledge around what cryptocurrencies are and I don't think we can just put all cryptocurrencies in the same bucket anymore; we'll need a greater understanding of which type of cryptocurrency is which for the purpose of taxation.
The views expressed in this article are solely those of the speaker and do not necessarily reflect the official position of Sputnik.
