Justin Sun Says China Taxing Crypto Means Legalization Is Coming

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(Kitco News) – Justin Sun, founder of the TRON network and recently confirmed leader of cryptocurrency exchange Huobi, said in a Twitter thread on Sunday that he believed China would soon ease restrictions on crypto.

China has taken a big step towards cryptocurrency regulation with the implementation of a crypto transaction tax, Sun wrote. The crypto transaction tax is a clear indication that the Chinese government views cryptocurrencies as a legitimate form of wealth and wants to ensure its proper taxation.

Sun was responding to a report published by Chinese tech journalist Colin Wu on Jan. 25 that revealed that Chinese tax authorities conducted investigations into the income of crypto whales to tax their income. Wu quoted an unnamed whale who told him that since early 2022, a local taxman has requested an audit of his personal income tax. Lots of people and a detailed list of whales that have been inspected.

Wu also said the process of auditing large crypto investors was still ongoing, but they were looking to apply the basic Chinese tax rate on their income. The property transfer income tax rate in personal income tax is 20% of personal profit/income, in the above specific cases it should be 20% of fund income.

Sun said this new commitment from tax authorities is expected to boost cryptocurrency adoption in China as it provides a clear regulatory framework for individuals and businesses, and he expects the government to regulate more. the crypto industry, providing more legitimacy and stability.

Sun also said that TRON and Huobi have done a lot to support the growth and development of blockchain technology in China.

Cryptocurrencies have been illegal in China since 2021, so Suns’ comments were carefully worded to take credit for blockchain technology while avoiding blame for any ongoing crypto trading.

Wu responded to Suns’ remarks by highlighting another of his findings.

Source: Exchanges such as Huobi have provided customer information to Chinese tax authorities. Some large customers have already been asked to collect taxes. https://t.co/f4c9a10FEb

— Wu Blockchain (@WuBlockchain) January 30, 2023

Sun responded quickly. Currently, Huobi is based in Seychelles and operates in the Caribbean, he said. Huobi does not share any customer information with tax authorities unless it follows an international mutual legal assistance procedure.

Wu also cautioned market participants against taking the most optimistic view of his report. Some have taken this to mean the Chinese government could recognize the legitimacy of cryptocurrencies, but the reality is clearly more complex, with tax authorities and financial authorities having differing views, he wrote.

Different Chinese government departments have sent competing signals in recent months. In September, China’s central bank celebrated the success of its crypto crackdown, which reduced the country’s percentage of global bitcoin transactions from 90% in 2017 to less than 10% in March 2022. And on December 10 , the Public Security Bureau announced the arrest of 63 people accused of laundering 12 billion yuan ($1.7 billion) using cryptocurrency.

On the other hand, the government has been much more open to recognizing other forms of digital assets. On December 29, China announced the launch of the China Digital Asset Trading Platform, the first law-compliant secondary trading platform for digital assets across the country.

The new platform represents significant membership from several major government departments, including state-owned China Technology Exchange and China Cultural Relics Exchange Center, the Ministry of Science and Technology, the State Office of intellectual property, the Chinese Academy of Sciences and the Beijing Municipal People’s Government.

Meanwhile, the government continues to expand the rollout of its own central bank digital currency (CBDC), the digital yuan, which now involves 26 major cities and 5.6 million merchants across China.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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