Taxation of Cryptocurrency Block Rewards in Selected Jurisdictions

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This report by the foreign law specialists of the Law Library of Congress surveys the tax treatment of new tokens obtained by cryptocurrency mining or staking, often known as “block rewards,” in 31 countries around the globe. It also addresses the tax implications of cryptocurrency tokens acquired through airdrops and hard forks (also referred to as a “chain split”) in various jurisdictions. This report complements a broader comparative study on regulatory approaches to cryptoassets, including the application of tax laws to cryptocurrency activities, published by the Law Library in April 2019.The report shows that while tax authorities of a number of countries have published guidance on the taxation of mined tokens such as Bitcoin and other “proof-of-work” cryptocurrencies, only a few specifically address the taxation of tokens received through staking, a term used to describe the process of obtaining reward tokens in the newer “proof-of-stake” cryptocurrencies. For countries where no explicit taxation rules on block rewards are available, the report provides information such as general taxation rules, proposed legislation, official statements, and comments from legal scholars and tax experts, which may be helpful in understanding how block rewards may be treated for tax purposes.Cryptocurrency is variously treated by the surveyed countries as investment property, a financial instrument, an intangible asset or property, a financial asset, a commodity, etc., as the table below shows. Italy treats exchanges of cryptoassets like exchanges of foreign fiat currencies for tax purposes. The taxation of cryptocurrency is dependent not only upon its nature, but also on other factors such as ho w it is acquired or used.

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