Taxing Blockchain Forks

Landoni, Mattia; Pieters, Gina

doi:10.2139/ssrn.3475598

Cited by 4 publications

(5 citation statements)

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“…At the same time, the holder continues to hold their pre-existing crypto assets, which exist on the pre-existing blockchain and are unaffected by the new crypto assets. The hard fork of Bitcoin Cash from Bitcoin is one such example (Bernstein et al 2020;Landoni & Pieters 2019;Webb 2018).…”

Section: Aus Australian Tax Office (Ato)mentioning

confidence: 99%

“…In the USA, Rule 2019-24 provides that when the fork results in the creation of a new crypto asset, which is referred to as the taxpayer's e-wallet, then the event results in taxable income, provided the taxpayer can transfer, sell or exchange the crypto asset (IRS 2019b). Such abilities represent evidence of the 'accession to wealth' of the taxpayer recognised in USA tax law (Landoni & Pieters 2019). The income is equivalent to the market value of the crypto asset when it is received (IRS 2019b).…”

Section: Blockchain Hard Forkmentioning

confidence: 99%

“…Mining is used in some instances (such as Bitcoin) to introduce new crypto asset tokens into the ecosystem. Other crypto assets have been introduced through Initial Coin Offerings (ICOs), in which tokens are sold in a market similar to shares, or airdrops, and tokens are given away to selected participants to promote their adoption (Kaal 2018;Landoni & Pieters 2019). Crypto asset tokens are also bought and sold in the secondary market, either privately or on crypto asset exchanges (Law Library of Congress 2018).…”

Section: A Brief Introduction To Crypto Assetsmentioning

confidence: 99%

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An analysis of South Africa’s guidance on the income tax consequences of crypto assets

Vumazonke

Parsons²

2023

SAJEMS

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Background: A media statement issued by the South African Revenue Service (SARS) in 2018 represents the primary guidance available to South African taxpayers on the income tax consequences of crypto asset transactions.Aim: This study assessed the adequacy of the guidelines available to South African taxpayers on the consequences of crypto asset transactions, and identified the income tax consequences for transactions not addressed in these guidelines.Setting: This study compared the scope and depth of the SARS guidelines to guidance issued in other jurisdictions. This distinguishes it from other studies focusing on the theoretical income tax consequences of crypto asset transactions.Method: The first phase of the study was an in-depth documental analysis to benchmark the SARS guidelines against the guidance of tax authorities in other jurisdictions. In the second phase of the study, a doctrinal legal research methodology was adopted to identify the income tax consequences of transactions not addressed by SARS, applying existing legislation and case law, and taking into account the guidance of the other selected tax authorities.Results: The study found that the SARS guidelines did not comprehensively address all the crypto asset transactions addressed by the other selected tax authorities.Conclusion: The study recommended that SARS provide comprehensive guidance to South African taxpayers on the income tax consequences of crypto asset transactions, the development of which would be supported by consequences identified in this study.Contribution: This study contributes to the understanding of, and development of taxpayer guidance to address the income tax consequences of crypto asset transactions in South Africa.

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Section: Aus Australian Tax Office (Ato)mentioning

confidence: 99%

Section: Blockchain Hard Forkmentioning

confidence: 99%

Section: A Brief Introduction To Crypto Assetsmentioning

confidence: 99%

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An analysis of South Africa’s guidance on the income tax consequences of crypto assets

Vumazonke

Parsons²

2023

SAJEMS

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“…As part of this copy-paste, fundamental changes could be introduced (deleting chapters, changing formatting decisions, etc.) The original Bitcoin protocol has had at least 17 forks leading to at least 17 new payment tokens, of which most but not all of which moved to a statistically zero price after a few months (Landoni and Pieters (2020)). If Bitcoin's value is derived from its value as a unique payment token, the introduction of these 17 competitors should have an impact on Bitcoin's price.…”

Section: Valuationmentioning

confidence: 99%

Crypto-Currencies and Crypto-Assets: An Introduction

Olbrecht

Pieters

2023

Eastern Econ J

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“…Moreover, they may open up new attack vectors through the potential of a replay attack and jeopardize data protection through cross-chain identity analyses. Tax and legal questions (Himmer et al, 2018;Landoni and Pieters, 2019;Webb, 2018), as well as the need for large financial investments to ensure the compatibility of storage solutions with new forks, introduce additional inefficiencies and, when the forked blockchain is used for the tokenization of off-chain assets or serves as a platform for interoperable decentralized applications, the situation gets even more complicated. To sum up, forks undermine the trust in the system and sow uncertainty.…”

Section: Introductionmentioning

confidence: 99%

Blockchain Forks: A Formal Classification Framework and Persistency Analysis

Schär

2020

Singapore Econ. Rev.

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Blockchain forks can have severe economic implications, sow uncertainty and undermine trust. In this paper, we introduce a formal framework to study the emergence, persistency and economic consequences of blockchain forks. We argue that blockchain forks can be process- or protocol-based and emerge unintentionally or deliberately. We then proceed with a sub-classification of protocol-based forks and study the circumstances under which a chain split may become permanent. It can be shown that the persistency of a fork depends on the nature of the change to the consensus rules and on the relative allocation of the consensus-relevant resources. Lastly, we discuss business implications as well as potential consequences for policy makers and practitioners.

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Taxing Blockchain Forks

Cited by 4 publications

References 0 publications

An analysis of South Africa’s guidance on the income tax consequences of crypto assets

An analysis of South Africa’s guidance on the income tax consequences of crypto assets

Crypto-Currencies and Crypto-Assets: An Introduction

Blockchain Forks: A Formal Classification Framework and Persistency Analysis

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