Cryptocurrency has become a multi-trillion-dollar industry, with major institutions investing billions in crypto assets and Bitcoin ETFs accumulating nearly forty billion dollars in the U.S. market since January 2024. However, taxation policies remain outdated, with most countries classifying digital assets as cryptocurrency since 2014. This means that misuse of cryptocurrency for spending or investing is incurably taxing.
In countries like the U.S., Australia, and Canada, even the slightest amounts of cryptocurrency qualify for capital gains tax. This lack of balance is evident in the world of decentralized finance (DeFi), which allows for flexibility and frequent asset transactions but treats every realization as a transaction for income tax purposes. Some U.S. IRS officials have considered categorizing DeFi as traditional broker-dealers, but Congress blocked the suggestion in March, with the Donald Trump administration likely sympathetic to this decision.
Stablecoins, Remote Work, and the Emerging Tax Lessons
The range of taxation difficulties discussed previously has further implications and branches out even into stablecoins—crypto assets that attempt to keep a constant value, usually linked to fiat currencies. These coins are being minted with increasing frequency and are gaining acceptance as a means of payment and even as salaries among remote workers and freelancers who work across borders.
Even in such cases, most tax authorities on this side treat stablecoin transactions as capital gains events. This means when you earn a paycheck in a stablecoin, cashing it into your local currency over a bank counter could create a tax liability, not because you made more through efforts but simply through movement.
Such policies impose stealthy burdens that render crypto all but impractical for everyday use—and this is at a time when the technology is gaining traction alongside its increasing accessibility; the jury is still out on how crypto assets will ever be integrated into daily life without these policies.
A Call to Action
The crypto industry welcomes prudent taxation. What is required, however, is a reform as reasonable as these policies are ridiculous—one that differentiates basing on speculation and treating crypto as a functional currency.
Differentiation about the use of crypto, such as on investment, spending, or saving, is seen as the key for an effective proposal. In conjunction, calm down the censors on expenditures on other assets in small amounts. These should not be hit with the same harsh tax regime as bigger disposals of investments.
Those changes wouldn’t only ease friction—they would also reduce the degree to which the regulators pretend to know how practical digital assets operate.
Policy Advancement Is Vital for the Future of Crypto.
Crypto remains stuck in a paradox if there is no substantial reform to crypto taxation. On one side, the sector continues to flourish, advance, and carve new pathways for innovative finance. On the other side, it is chained to a tax framework designed for a far more rudimentary version of itself.
If regulators aim to nurture the next wave of blockchain technology, the foremost step is straightforward: change the world’s tax code around the calendar year to current-day, not 2014.
