As cryptocurrency use increases in Latin America, the day when global adoption happens may not be far off. But before then, governments around the world are enforcing regulations and taxation on the industry. Argentina joins a number of countries that have passed a taxation law for the cryptocurrency industry.
Crypto assets in Argentina will now be subjected to tax, says the Argentine government. This was contained in a decree published on Wednesday. The decree stated that cryptocurrency assets and transactions are now taxable under the Credit and Debt laws. Some third-party crypto transactions are however exempt from the tax ruling and will not be taxed. But transactions that involve the sale and purchase of crypto assets will be taxed.
Previous tax rules in Argentina exempted peer-to-peer (P2P) crypto transactions as they were previously classified as personal financial activities. But the new rule has removed that exemption and P2P crypto transactions will now be taxed according to the national tax law. The exact percentage was not stated by the Buenos Aires Times.
Crypto Tax Laws Around The World
Where cryptocurrencies are not outrightly banned, heavily taxed, or slammed with tough regulations, the crypto industry has achieved giant strides in just over a decade. There is currently no globally accepted regulation for the crypto industries; countries set the regulations that they feel works for them.
Among the countries that don’t tax cryptocurrency transactions is Belarus. Since 2018, Belarus declared crypto transactions as personal financial activities that are not subject to tax. Malaysia also has a non-tax crypto policy in place and has declared cryptocurrencies as personal assets. This saves crypto traders a lot of money that would have been paid in tax. Some countries charge as high as 28% in tax for financial transactions.
But taxation can negatively affect the growth rate of cryptocurrency in the world. In countries where the government taxes crypto transactions, crypto investors may lose the incentive to perform more transactions on blockchain platforms. Although crypto is growing despite the limitations, taxation threatens to effectively reduce the interest and participation in the crypto industry.
How Will This Impact Crypto
While the crypto industry grapples with government regulations and internal challenges such as network congestion and high transaction costs, developers are working on new solutions that will erase them and help to launch the new digital financial system to greater heights. Argentina has the third-largest crypto community in South America and the crypto investors there have shown a keen interest in DeFi projects.
Analysts agree that the Argentine government’s decision to tax cryptos may lead to a reduction in the number of people who trade and a reduction in the transactions carried out on exchanges. Although the government has not announced a decision to release its CBDC, some say that it is taxing other digital tokens to encourage Argentines to develop interests in the country’s currency.
One thing is however clear, the rate of crypto adoption in Latin America will increase in the future.