Chinese tax newspaper, China Tax News, has suggested to the Chinese government that it should start collecting taxes on cryptocurrencies. This is coming when China is already hot for crypto traders and miners, as the country’s ban on digital assets continues.
The Move Could Give Crypto Indirect Legalization
According to Chinese journalist, Colin Wu, who initially reported the news, the Chinese government’s tax officials are mulling over the taxation of the cryptocurrency business. He added that the officials admitted that the industry has a very high revenue potential from tax.
With cryptocurrency businesses not legally approved by the government, some experts believe that the government’s tax on crypto assets could give them indirect legalization.
But with the stance of the PBOC on crypto-related activities, such taxation may “indirectly recognize their legalization,” Wu stated.
The publication mentioned that the initial text in the newspaper was referring to the crypto market and its trading volume.
Initial coin offering was banned in China in 2017. After that ban, the government moved again to crack down on digital assets in September 2021, declaring online crypto trading and all crypto transactions illegal.
Cryptocurrency Is Still Banned In China
When China started taking action on the ban, several crypto-based firms were forced to relocate to other regions that are favorable to the crypto business.
While local crypto exchange Huobi relocated completely, other platforms like Binance stopped providing services to customers in the region.
However, the publication pointed out that although the law regards crypto trading as illegal, it’s not impossible to hold crypto.
In this sense, exchanges based overseas may continue operating in China, but have to be taxed in this case. However, the author of the article admitted that a legal framework has to be created for such a scenario to hold.
The author also stated that it’s highly unlikely that digital assets will disappear from China in a short period. Despite the ban, crypto trading may still be going on in the country, although on a lighter proportion before the ban.
The author explained that Chinese residents are not prohibited from holding cryptocurrencies, which makes the transactions “invalid civil act.”