Crypto tax standards in the upcoming year may prove to be a trying time for the industry. Global tax regulators are applying more pressure on centralized and decentralized exchanges. This could even affect your own personal crypto holdings.

The primary source of income for most governments is taxation. Not surprisingly, crypto’s incredible growth has attracted the attention of tax agencies everywhere, and significant changes are coming very soon. 

This article will shed some light on the recently passed global crypto tax plans and how they might affect the future of the industry.

Witnessing the Rise of Crypto

These global crypto tax plans come from an unelected international organization, the Organization on Economic Cooperation and Development (OECD). It consists of 38 of the most developed and wealthy countries. The OECD website states that its purpose is to “Build better policies for better lives.”

In practice, the organization proposes policy recommendations that have the potential to become regulations in its member countries. Currently, there are 38 OECD member countries.

The OECD’s interest in cryptocurrency taxation began in late 2020. This makes sense, given that this was when the previous crypto bull market started to explode. During this time, the regulatory organization noticed inconsistent tax regulations between its member countries. 

Shortly after, the OECD announced that it would release global crypto tax standards in 2021, citing ‘rising interest by its member countries to tax cryptocurrencies.’ 

Taxing Crypto Earnings

There has already been some delay since the OECD’s initial draft of the global crypto tax standards. This draft, however, contains some concerning elements involving potential tax reporting rules related to DeFi protocols, stablecoins, and NFTs.

There are also concerns about whether compliance with the Crypto Asset Reporting Framework (CARF) would price out the competition. This is essentially what happened with the OECD’s previous global tax proposal for the traditional financial system. The OECD introduced the Common Reporting Standard (CRS) in 2014. It was challenging and expensive for existing financial institutions to comply with when it went into effect.