According to Justin Sun, China is moving towards crypto legitimacy by imposing a tax on crypto transactions. The move signifies that the Chinese government views crypto assets as a legitimate wealth source and storage vehicle.
China’s crypto transaction tax policy
Justin Sun, head of crypto exchange Huobi and Tron founder, announced that China was taking significant steps to impose crypto regulations through taxes levied on digital asset transactions. According to Sun, China’s move signals a close embrace of cryptocurrencies.
China has continuously banned cryptocurrencies in its jurisdiction. However, the tax policy indicates that digital assets will be accepted in the country for the tax policy to pull through. The Chinese government is seemingly viewing cryptocurrencies as a “legitimate form of wealth, ” hence the need for taxation. Despite outlawing crypto mining and crypto transactions, the use of digital assets in China has increased exponentially.
South China Morning Post confirmed that China is among the world’s strongest crypto markets after recording more than $220 billion in transactions between June 2021 and July 2022. According to Justin Sun, more Chinese reforms are underway to provide further “legitimacy and stability” to the crypto market.
Justin Sun speaks on customer privacy in China
Local authorities in China have commenced a crackdown on whales by asking for a 20% personal income tax on investment profits. Allegations narrowed down to exchanges such as Huobi believed to give customer information to the Chinese government for tax purposes.
According to Wu Blockchain, a Chinese reporter on crypto, a whale was contacted by a government tax audit firm requesting to view his income tax, including income raised from cryptocurrencies. The whale had just cashed out tens of millions of yuan and claimed that exchanges shared his transaction history with tax authorities in China.
However, Sun dismissed the accusations by Wu Blockchain, stating that Huobi does not provide clients’ personal information to tax authorities unless the request follows judicial procedures.