Crypto regulation is one of the most pressing concerns for governments globally, with crypto taxation also a major concern. The European Parliament is finally taking its first step in that direction, even though many other nations have previously suggested taxes on cryptocurrency transactions.
EP introduces taxes to cryptocurrency
The parliamentarians approved a motion(1) urging member states to coordinate their cryptocurrency taxes. The resolution also recommended using blockchain technology to collect taxes more transparently and effectively. After days of sideways movement, the cryptocurrency market witnessed a comeback of more than $47 billion in the last 24 hours.
On October 4, the European Parliament (2) members approved a non-binding resolution establishing guidelines for the cryptocurrency market. Only seven votes were cast against the resolution, which received nearly 91.3% of the vote to approve. This resolution operates in the crypto market in two ways: first, it targets digital assets for uniform taxes; second, it uses blockchain technology to carry out taxation services.
The resolution stated that,
“...crypto assets must be subject to fair, transparent and effective taxation. It also invites authorities however to consider a simplified tax treatment for occasional or small traders and small transactions.”
The resolution recommended developing a precise and widely recognized definition of crypto assets and identifying policies regarding tax evasion in crypto assets to make this happen. It was also recommended to create an understandable description of a taxable event. As stated in the resolution,
The conversion of a crypto asset into a fiat currency might be the more appropriate choice and it asks the Commission to specifically assess this option, along with a more general one concerning the identification of possible taxable events.”
The resolution also acknowledged blockchain as a crucial and effective tool in taxing digital assets. It was urged in the resolution to use technology to automate tax collection and boost transparency by reducing corruption.
How did the crypto market react?
The crypto market has barely changed since September 19, and Tuesday marked the first significant change (3). The overall market capitalization of all cryptocurrencies increased by 5.36%, rising by $47.41 billion to $928 billion. Even if the market cap is still a long way from $1 trillion, psychological levels have historically been a zone where trends can change. The black dots of the Parabolic SAR, however, do indicate a strong upswing that, if maintained, may raise the market cap to $1 trillion.