Canada Adopts International Crypto Tax Reporting Standard
Canada is aimed at having the OECD standard for crypto asset tax reporting in place by 2027, as agreed with 46 countries.
As technology-based currencies and online assets become more and more accepted across the world, governments are leaning towards developing and implementing national digital currencies. Referred to as central bank digital currencies (CBDCs), these assets are the fully digital versions of a country’s fiat currency that are issued and regulated by the country’s central bank.
CBDCs are unlike cryptocurrencies such as Bitcoin ($BTC) and Ethereum ($ETH) because they are issued, created, and controlled by the government and national banks, making them centralised assets.
Countries across different parts of the globe have been exploring, testing, and launching CBDCs to work alongside their traditional national currencies. Just this month, the Reserve Bank of Australia (RBA) announced plans to collaborate with the financial research institute Digital Finance Cooperative Research Centre to launch a pilot of an Australian dollar CBDC. According to the announcement, the RBA will be looking to “explore potential use cases and economic benefits of a central bank digital currency (CBDC) in Australia.”
As per the announcement, the pilot project will launch at the end of March and run for two months, concluding on 31st of May.
Countries currently exploring the use of a CBDC
Australia is just one of many countries that are exploring the use and benefit of launching their own CBDCs.
China
While China is not cryptocurrency-friendly and has issued a blanket ban on all Bitcoin activity, the government has one of the most advanced CBDCs currently in use in parts of the country. China’s digital currency electronic payment (DCEP) was designed with the aim of eventually replacing physical cash with the digital yuan.
Sweden
Sweden’s Riksbank is testing its e-krona CBDC with the aim of providing a safe and efficient payment system for consumers. The Risbank started trialing the e-krona at the end of 2022 and should be ready to issue the CBDC once the legislation is in place to implement the digital currency.
The United States
The US has been working out legislation and developing the infrastructure to regulate cryptocurrencies for several years. With the different states and laws involved, it has been challenging for the government to implement a standard protocol to regulate cryptocurrency. While decentralised currencies are harder to manage, in May 2021, the Federal Reserve announced that it is studying the possibility of launching a CBDC. In November 2021, the Fed published a paper outlining the research and stating that it was seeking public comment on the potential benefits and risks of a digital dollar. Currently, lawmakers are monitoring other countries that have launched a CBDC and exploring the success before making a decision on whether to issue a digital dollar. As it stands, there is no timeline for when a decision will be made.
The European Union
The European Union is currently exploring the potential launch of a digital euro, a region-wide CBDC that would complement cash and other payment methods. The project is still in the research and experimentation phase, and the European Central Bank (ECB) is consulting with stakeholders to assess the potential benefits and risks of a digital euro.
Russia
Rife with sanctions, global payments from and within Russia have been an obstacle for business owners and citizens. A digital ruble will not necessarily act as a global currency, like Bitcoin, but it will present greater financial inclusion within the country.
Currently, the Bank of Russia is still in the development and testing phase of its digital ruble project. The bank has conducted several pilot tests and consultations with industry experts and stakeholders, including financial institutions, businesses, and individuals, to gather feedback and assess the feasibility and potential risks and benefits of a digital ruble.