According to a senior European Central Bank official, cryptocurrencies should be taxed, especially if they have a high carbon footprint.
Fabio Panetta, one of the six Executive Board members of the ECB, will issue the appeal in a few hours on Monday at Columbia University in New York speech published in advance by the central bank.
“Currently, the tax treatment of crypto assets is minimal: we know very little about who really owns them and the size and distribution of capital gains,” his speech reads.
Taxes should be even higher for cryptos running on blockchain technologies known as proof-of-work, which require specialized computers that use a lot of energy to process and record transactions. The best-known example is Bitcoin.
“Negative externalities leading to sunk costs to society, such as high levels of pollution, could be factored into reasonable taxes levied on participants in crypto markets,” reads the text — which references the American Wild West and The popular TV series “Game of Thrones” is even covered with a character.
Taxes are one of four policy issues Panetta will highlight in his call for policymakers to crack down on an industry he says thrives on speculation and could lead to financial instability if left unheeded.
The other three areas are protection against dirty money, regulatory reporting obligations and transparency requirements.
EU lawmakers are about to agree new rules for these three areas for so-called stablecoins, which are digital assets tied to a national currency or basket of financial products. However, most of these measures end when it comes to “unsecured” crypto assets, whose value is determined by investor appetite.
“Regulatory action in Europe needs to go further,” said Panetta. “We need to focus more on unsecured crypto-asset activities conducted without service providers.”
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