PwC launches Global Crypto Tax Report 2024

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Tax authorities worldwide are demanding more information on transactions in crypto assets; tokenisation has the potential to revolutionise investment in both securities and illiquid assets

Hong Kong, 22 January 2024 – PwC today releases its Global Crypto Tax Report 2024. For the fourth year, PwC explores the tax issues facing participants in the digital assets space. At the same time, the report offers a detailed analysis of the direct and indirect tax treatment of crypto assets in 59 jurisdictions across the world.

“Over the last year, we have seen significant new developments in the crypto space,” says Peter Brewin, Crypto and Web3 Co-Leader, PwC Mainland China and Hong Kong. “Our report captures these, while also offering an unrivalled analysis of tax treatment in 59 jurisdictions, ranging from Angola to Vietnam.”

The report identifies three core trends and developments in digital assets and the impact that these are having from a tax perspective:

Theme 1 - Increasing regulation – in particular around tax reporting: ​

PwC explains how much of this takes the form of new tax reporting requirements for brokers and other intermediaries involved in the exchange of crypto assets in the US, EU and elsewhere. The OECD issued its final guidance on the new Crypto-Asset Reporting Framework (CARF), along with amendments to the Common Reporting Standard (CRS), in June 2023.

However, reporting crypto asset income and gains accurately and in a timely manner may not be easy. As outlined in the report, the complexity of the crypto asset ecosystem, market volatility and a lack of standardised tools makes for a challenging task. ​

Theme 2 - Tokenised Real-World Assets:

Assets which can be tokenised range from securities (funds, equities, bonds, loans and money market products) to illiquid assets (such as real estate, artwork, collectibles, or intellectual property). The tokenisation process uses blockchain technology to provide a record of ownership.

“While tokenisation of real-world assets is increasingly common, few jurisdictions have specific tax rules for these tokenised forms,” says Graham Robinson, Partner, PwC UK. “Our paper assesses how existing tax rules may need to be adapted to reflect these new types of investable asset.” 

Theme 3 - Greater regulation of stablecoins and a growing role for tokenised money:

While PwC’s report analyses the benefits of real-world asset tokenisation (including faster settlement, built-in reconciliation and the creation of assets with embedded smart contract capabilities), it also argues that these benefits can only be realised properly with the support of programmable payments. In other words, the settlement technology needs to be compatible and integrated with the technology underpinning the real-world assets.​

”There has been growing interest in various forms of tokenised payment and settlement, in line with the tokenisation of real-world assets,” says Mazhar Wani, Partner, PwC US. “These include stablecoins, tokenised bank deposits, CBDCs and even tokenised money market funds. As these new forms of payment expand, tax rules may need to evolve to ensure that they are not treated differently from traditional forms of payment.” 

Notes

Full report: PwC Global Crypto Tax Report 2024