Cryptocurrencies To Watch

Tag: Crypto Taxes

  • Crypto Investor Bags 2-Year Prison Sentence for $3.7M Tax Evasion

    Crypto Investor Bags 2-Year Prison Sentence for $3.7M Tax Evasion

    Frank Richard Ahlgren III, an early Bitcoin investor residing in Texas, has been sentenced to two years in prison for tax evasion. According to the United States Department of Justice (DOJ), he earned about $3.7 million from selling bitcoins in 2017 but underreported his realized capital gains from the digital asset sales.

    Ahlgren’s $3.7M Tax Evasion

    Ahlgren purchased 1,366 bitcoins in 2015 using his Coinbase account. In October 2017, he sold approximately 640 BTC for $3.7 million, using the proceeds to buy a house in Park City, Utah. However, when it came time to prepare his 2017 federal income tax return, Ahlgren lied to his accountant by submitting a false summary of his gains and losses from the sale of his bitcoins.

    In 2018 and 2019, Ahlgren sold additional bitcoins for over $650,000 but did not report these sales on his tax returns. To conceal his transactions, Ahlgren used sophisticated techniques, including moving his bitcoins through multiple wallets, meeting an individual in person to exchange bitcoins for cash, and using mixers to obscure his transactions on the blockchain.

    Sentenced and Fined

    The U.S. District Court sentenced Ahlgren to two years in prison. He will also serve one year of supervised release and pay $1.09 million restitution to the United States.

    Notably, the acting special agent in charge of IRS-Criminal Investigation (IRS-CI), Lucy Tan, acknowledged that the case was the first criminal tax evasion prosecution “centered solely on crypto.” Commenting further on the case, he added:

    “Ahlgren will serve time because he believed his cryptocurrency transactions were untraceable. This case demonstrates that no one is above the law. My team at IRS Criminal Investigation has the expertise and tools to track financial activity, whether it involves dollars, pesos, or cryptocurrency.”

    The Future of U.S. Crypto Taxation

    U.S. President-elect Donald Trump recently proposed a zero-tax policy on crypto assets created in the country, such as BTC and XRP. In contrast, others created outside, like ETH, would be subject to taxation. He argued that taxing crypto transactions is unfair, suggesting that Bitcoin should be treated like another form of money and tariffs should be imposed instead.

    Trump also publicly pledged to commute Ulbricht’s sentence if re-elected, drawing cheers from the crowd. Given the president-elect’s growing pro-crypto stance and opposition to Bitcoin taxes, he may extend similar mercy to Ahlgren after the inauguration.

  • Russia President Signs Bill Recognizing Crypto as Property

    Russia President Signs Bill Recognizing Crypto as Property

    Russian President Vladimir Putin has signed a bill into law that recognizes crypto, including Bitcoin, as property. This landmark legislation brings a clear taxation framework to the digital asset industry in Russia, providing much-needed clarity and reassurance to digital asset investors.

    Implications of Crypto “as Property”

    According to the law, mining and selling digital assets are exempt from value-added tax (VAT). Services related to crypto transactions are also exempt from VAT. However, operators of mining infrastructure must inform tax authorities about who is using their services to mine crypto.

    The law also outlined how crypto will be taxed. Digital assets obtained through mining will be considered income and taxed accordingly for individuals. The tax rates, set at 13% for income up to 2.4 million rubles ($22,643) and 15% for income above that amount, are reportedly designed to ensure a fair and just treatment of crypto income.

    The crypto law further introduced some restrictions on tax structures for organizations and individual entrepreneurs involved in crypto mining and sales. Meanwhile, the crypto regulations will be officially published on a government website or other official channel. Once they are formally published, they will become enforceable and legally binding.

    Notably, some parts of the law may have a delayed implementation or a phase-in period to allow for a smooth transition. These provisions will provide temporary relief or exceptions to help individuals or organizations adapt to the new law.

    Why the Crypto Law?

    Russia has been exploring using crypto for international trade to bypass Western sanctions and reduce its reliance on the US dollar. In response to the expanded U.S. sanctions in June, the Russian parliament passed bills in July to test digital assets for cross-border payments under central bank supervision, which President Putin signed into law.

    In a similar move, Hong Kong also wants to strengthen its position as a crypto-friendly hub. However, while Russia taxes individuals and organizations, its authorities will do the opposite. The government recently proposed a plan to exempt certain establishments, including hedge funds and private equity funds, from paying taxes on gains made from crypto trading and investments.

  • Hong Kong to Exempt Hedge Funds From Paying Crypto Gains Tax

    Hong Kong to Exempt Hedge Funds From Paying Crypto Gains Tax

    Hong Kong has revealed plans to strengthen its pro-crypto position by relieving a few selected establishments, including hedge funds, private equity funds, and investment vehicles of the super-rich, from paying tax on gains made from cryptocurrency trading and investments.

    Despite not being a full country, China’s Special Administrative Region (SAR) has its own government, which is working to achieve this by Q1 2025.

    Hong Kong’s Tax Exemptions

    According to the Financial Times, Hong Kong’s government has released a proposal that is awaiting approval within the next six weeks. The proposal notes that taxation is a key factor that asset managers consider when determining where best to operate. Therefore, the government wants to welcome more crypto-related firms into its region by introducing tax exemptions for crypto gains.

    “This is an important step in boosting Hong Kong’s status as a financial and crypto trading hub,” said Patrick Yip, an international tax partner at Deloitte China.

    Yip also noted that some family offices have only allotted an insignificant percentage of their wealth to crypto holdings. Therefore, the new tax exemption policy will encourage them to invest more.

    Additionally, the SAR government is planning to expand the range of tax-exempt investments to include private credit, overseas property, and carbon credits to attract more investors to the region.

    Hong Kong Embraces Crypto

    Notably, Hong Kong’s move to welcome more crypto investors via zero taxation gives it an edge over its biggest competitor, Singapore, the home of the first Asian bank to offer over-the-counter (OTC) crypto trading services for institutional investors.

    “These changes are designed to put Hong Kong on a par with Singapore or Luxembourg, in that there’s no risk of the fund being subject to tax,” said Darren Bowdern, head of asset management tax for Asia at KPMG.

    Significantly, Hong Kong has been pro-crypto for some time now. Earlier in April, it followed in the footsteps of America by approving its first Bitcoin exchange-traded fund (ETF).

    Meanwhile, the SAR has revealed plans to introduce a regulatory framework for stablecoins before this year runs out. 

  • Russian Government Approves 15% Tax on Crypto Mining and Transactions

    Russian Government Approves 15% Tax on Crypto Mining and Transactions

    The Russian government has approved draft amendments to the bill on taxation of income and expenditures from crypto mining and its purchase and sale.

    According to an Interfax International Information Group report, the legislation will define cryptocurrencies as properties for tax purposes. Revenue obtained through Bitcoin mining and trading activities will fall under taxable provisions.

    A 15% Tax on Crypto Mining

    The report further noted that crypto transactions will not incur value-added tax and will instead align with the taxation structure as personal income from securities, taxed at no more than 15%.

    For mining, taxes will be calculated based on the prevailing market value of assets when acquired. Additionally, miners can offset operational expenses against their taxable earnings. The updated regulations mandate that infrastructure providers supporting mining activities report details of miners utilizing their platforms periodically.

    The Russian Finance Ministry stated that levying taxes on mining revenues ensures a fair representation of these operations. It noted that the strategy aims to harmonize governmental objectives with business priorities.

    “As a result of discussions with businesses, a decision was made on the advisability of taxing the financial result from mining as the fairest reflection of the results of this activity. The approach is aimed at observing a balance between the interests of businesses and the state,” the Finance Ministry said.

    Russian to Control Crypto Mining Energy Consumption

    The current development is a part of Russia’s broader push to establish oversight in the crypto sector. In recent months, authorities have worked to address energy usage tied to crypto mining and enhance regulatory measures within the industry.

    The current amendment builds upon the crypto taxation proposal introduced in December 2020, following a recent recommendation by the Russian Federal Tax Service to tax miners’ unrealized profits.

    Additionally, authorities have introduced a power consumption cap for Bitcoin miners, allowing unregistered users a maximum of 6,000 kilowatt-hours. Plans are also underway to curb crypto mining in select regions experiencing continuous energy deficits.

  • Taiwan Regulator Plans to Tax Crypto Trading Income

    Taiwan Regulator Plans to Tax Crypto Trading Income

    A Taiwanese local media outlet reported that the country’s Minister of Finance, Chuang Tsui-yun, stated in a recent session that profits from crypto transactions would be subject to income tax. The statement was made at the 2025 central government budget review session, attended by several government officials.

    The taxation move is likely driven by recent optimism fueled by a more favorable regulatory environment for crypto. These expectations have driven Bitcoin prices higher following Trump’s re-election and the entry of pro-crypto legislators into the United States Congress. The move aims to clarify Taiwan’s taxation policies for crypto and other digital assets.

    Taiwan to Tax Crypto Trading Income

    While legislator Lai Shih-pao expressed concerns over Taiwan’s taxation policies for crypto, Minister Chuang reassured that profits from such transactions are taxable under income tax law, specifically the property transaction income provision of current tax laws. He added that the Ministry of Finance will explore auditing measures further.

    Cryptocurrencies are classified as digital assets rather than currency for individual income taxes. When these individuals profit from one crypto transaction but incur a loss from another, they can balance the two and only pay tax on the difference.

    Notably, 26 virtual asset service providers (VASPs) are registered under the country’s anti-money laundering (AML) regulation and are paying business and corporate income taxes. Domestic corporate investors engaging in crypto transactions will calculate profits or losses from exchanging crypto and other digital assets and pay the commensurate tax.

    The National Taxation Bureau will verify crypto transactions using auditing tools and external data sources to detect underreporting. Director-General of the Taxation Administration Sung Hsiu-ling promised to draft tax guidelines for crypto trading income within three months.

    More Crypto Taxation

    With the surge in crypto popularity, crypto taxes have been making headlines lately, with governments around the world trying to figure out how to tax them. Recently, Italian legislators proposed increasing the crypto tax to 28%. 

    In his desire to make the U.S. the “crypto capital of the planet,” President-elect Donald Trump has recently promised a zero tax on crypto assets when he assumes office. Meanwhile, some countries are more crypto-friendly than others regarding taxes, while others have banned crypto transactions entirely, labeling them as unlawful.