- “Startups in the crypto area have been going more and more onshore and have been avoiding tax havens.”
- There are “huge discrepancies between how crypto is viewed and how it is taxed.”
- The rapidly evolving nature of crypto continues to introduce new complications and ambiguity.
Crypto is now a billion-dollar industry. While reports covering the entire sector are patchy and overly conservative, filings from individual companies speak to the growing scale of crypto, with Coinbase and Blockchain.com alone generating USD 7.35bn and USD 1.5bn in revenue in 2021, respectively.
These are relatively big figures, yet they raise an important question regarding tax. Because with crypto-related companies benefitting from the resources and infrastructure that have been cultivated in part using tax (e.g. educated people, energy grids, telecoms networks), there’s a strong argument to say that they should, in turn, be contributing to the system they’re benefitting from.
So few crypto firms are publicly listed, meaning that it’s nigh-on impossible to say with any certainty how much the sector as a whole actually contributes to public finances. However, industry figures affirm that all legally registered companies comply with all applicable taxation laws in their respective jurisdictions, implying that crypto’s tax bill is indeed growing in parallel with its revenues and profits.
The crypto sector and tax: Havens and reputational risks
The relationship between the crypto industry and tax is something of a mystery, if only because so many major crypto exchanges and businesses are registered in tax havens.