A framework for understanding the taxation of digital tokens
As a relatively new area, the taxation of digital tokens can give rise to several dangerous misconceptions. This article lays out five propositions to counter these misconceptions: 1) digital tokens are not a single monolithic asset class attracting uniform tax treatment; 2) the common trichotomous...
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2022
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| Online Access: | https://ink.library.smu.edu.sg/sol_research/3908 https://ink.library.smu.edu.sg/context/sol_research/article/5866/viewcontent/A_Framework_for_Understanding_the_Taxation_of_Digital_Tokens.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | As a relatively new area, the taxation of digital tokens can give rise to several dangerous misconceptions. This article lays out five propositions to counter these misconceptions: 1) digital tokens are not a single monolithic asset class attracting uniform tax treatment; 2) the common trichotomous division of digital tokens into payment, utility and security tokens is derived from securities regulation and should not be blindly adopted into tax law; 3) the three classes are not mutually exclusive and hybrid tokens may exist; 4) the fact that an asset is a digital token rarely changes its tax treatment by itself, which must be determined by the surrounding circumstances of the relevant taxable event; and 5) there are broad similarities in the way that digital tokens of the same class might generally be taxed across a variety of common taxable events, which might provide a useful broad overview of this field. |
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