Advertisement

Cryptocurrency and Tax Regulation: Global Challenges for Tax Administration

  • Gamze Öz Yalaman
  • Hakan Yıldırım
Chapter
First Online:
Part of the Contributions to Economics book series (CE)

Abstract

This chapter investigates whether the government should taxed cryptocurrency or not by using game theoratical framework. In this game, both government and cryptocurrency investors will determine the strategies to maximize their own benefits. In order to achieve the Nash equilibrium, two-person zero sum game matrix is created. As a result, Nash Equilibrium occurs in only the one case that indicates cryptocurrency should be taxed with low tax rate and high penalty rate. Moreover to understand tax policies of cryptocurrency this chapter also investigate various countries taxation policy on cryptocurrency. It is clear that there is no consensus among countries about legal status and taxation process of cryptocurrencies.

This is a preview of subscription content, log in to check access.

References

  1. Akins, B. W., Chapman, J. L., & Gordon, J. M. (2014). A whole new world: Income tax considerations of the cryptocurrency economy. Pittsburgh Tax Review, 12, 25–56.Google Scholar
  2. Angelis, J., & da Silva, E. R. (2018). Blockchain adoption: A value driver perspective. Business Horizons.  https://doi.org/10.1016/j.bushor.2018.12.001 CrossRefGoogle Scholar
  3. Bal, A. (2015). How to tax cryptocurrency? In D. L. K. Chen (Ed.), Handbook of digital currency. San Diego, CA: Academic Press, Elsevier.Google Scholar
  4. Boehm, F., & Pesch, P. (2014). Bitcoin: A first legal analysis. In International conference on financial cryptography and data security (pp. 43–54). Springer, Berlin.Google Scholar
  5. Bryans, D. (2014). Cryptocurrency and money laundering: Mining for an effective solution. Indiana Law Journal, 89(1), 441–472.Google Scholar
  6. Casino, F., Dasaklis, T. K., & Patsakis, C. (2018). A systematic literature review of blockchain-based applications: Current status, classification and open issues. Telematics and Informatics, 36, 55–81.CrossRefGoogle Scholar
  7. Choo, K. K. R. (2015). Cryptocurrency and virtual currency: Corruption and money laundering/terrorism financing risks? In Handbook of digital currency (pp. 283–307). Elsevier, Amsterdam.CrossRefGoogle Scholar
  8. Fry, J., & Cheah, E. T. (2016). Negative bubbles and shocks in cryptocurrency markets. International Review of Financial Analysis, 47, 343–352.CrossRefGoogle Scholar
  9. Fudenberg, D., & Tirole, J. (1991). Game theory. Cambridge: MIT Press.Google Scholar
  10. Harwick, C. (2016). Cryptocurrency and the problem of intermediation. The Independent Review, 20(4), 569–588.Google Scholar
  11. Hawlitschek, F., Notheisen, B., & Teubner, T. (2018). The limits of trust-free systems: A literature review on blockchain technology and trust in the sharing economy. Electronic Commerce Research and Applications, 29, 50–63.CrossRefGoogle Scholar
  12. Hayes, A. S. (2017). Cryptocurrency value formation: An empirical study leading to a cost of production model for valuing Bitcoin. Telematics and Informatics, 34(7), 1308–1321.CrossRefGoogle Scholar
  13. Holub, M., & Johnson, J. (2018). Bitcoin research across disciplines. The Information Society, 34(2), 114–126.CrossRefGoogle Scholar
  14. Kaplanov, N. M. (2012). Nerdy money: Cryptocurrency, the private digital currency, and the case against its regulation. Loyola Consumer Law Review, 25(1), 111–174.Google Scholar
  15. Lambert, E. E. (2015). The internal revenue service and Bitcoin: A taxing relationship. Virginia Tax Review, 35, 88.Google Scholar
  16. Laurence, T. (2017). Blockchain for dummies. Hoboken, NJ: Wiley.Google Scholar
  17. Li, X., & Wang, C. A. (2017). The technology and economic determinants of cryptocurrency exchange rates: The case of Bitcoin. Decision Support Systems, 95, 49–60.CrossRefGoogle Scholar
  18. Litwack, S. (2015). Bitcoin: Currency or fool’s gold: A comparative analysis of the legal classification of Bitcoin. Temple International and Comparative Law Journal, 29, 309.Google Scholar
  19. Marian, O. Y. (2013). Are cryptocurrencies ‘super’ tax havens? Michigan Law Review First Impressions, 112, 38–48.Google Scholar
  20. McLeod, P. (2013). Taxing and regulating cryptocurrency: The government’s game of catch up. CommLaw Conspectus, 22, 379–406.Google Scholar
  21. Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. Consulted.  https://doi.org/10.1007/s10838-008-9062-0 CrossRefGoogle Scholar
  22. Puthal, D., Malik, N., Mohanty, S. P., Kougianos, E., & Das, G. (2018). Everything you wanted to know about the blockchain: Its promise, components, processes, and problems. IEEE Consumer Electronics Magazine, 7(4), 6–14.CrossRefGoogle Scholar
  23. Ram, A. J. (2018). Taxation of the Bitcoin: Initial insights through a correspondence analysis. Meditari Accountancy Research, 26(2), 214–240.CrossRefGoogle Scholar
  24. Reid, F., & Harrigan, M. (2013). An analysis of anonymity in the bitcoin system. Security and Privacy in Social Networks, 197–223.  https://doi.org/10.1007/978-1-4614-4139-7_10 Google Scholar
  25. Scott, B. (2016). How can cryptocurrency and blockchain technology play a role in building social and solidarity finance? (No. 2016-1). UNRISD Working Paper.Google Scholar
  26. Shcherbak, S. (2014). How should Bitcoin be regulated. European Journal of Legal Studies, 7, 41.Google Scholar
  27. Simser, J. (2015). Bitcoin and modern alchemy: In code we trust. Journal of Financial Crime, 22(2), 156–169.CrossRefGoogle Scholar
  28. Slattery, T. (2014). Taking a bit out of crime: Cryptocurrency and cross border tax evasion. Brooklyn Journal of International Law, 39(2), 829–873.Google Scholar
  29. Small, S. (2015). Bitcoin: The Napster or currency. Houston Journal of International Law, 37, 581.Google Scholar
  30. Swan, M. (2015). Blockchain blueprint for a new economy. Sebastopol, CA: O’Reilly Media.Google Scholar
  31. Tapscott, D., & Tapscott, A. (2016). Blockchain revolution: How the technology behind bitcoin is changing money, business, and the world. London: Penguin Books.Google Scholar
  32. The Law Library of Congress, Global Legal Research Centre. (2018). Regulation of cryptocurrency around the world. Research Report. https://www.loc.gov/law/help/cryptocurrency/world-survey.php
  33. Tsukerman, M. (2015). The block is hot: A survey of the state of cryptocurrency regulation and suggestions for the future. Berkeley Technology Law Journal, 30(4), 1127–1169.Google Scholar
  34. Wiseman, S. A. (2016). Property or currency: The tax dilemma behind Bitcoin. Utah Law Review, (2), 417–440.Google Scholar
  35. Yalama, A., & Çelikkaya, A. (2007). Türkiye Açısından Optimum Vergi Oranı, Vergi Cezası ve Denetim İlişkisinin Oyun Teorisi Modeli ileBelirlenmesi. ESOGÜ Sosyal Bilimler Enstitüsü Dergisi, 8(1), 131–145.Google Scholar
  36. Yli-Huumo, J., Ko, D., Choi, S., Park, S., & Smolander, K. (2016). Where is current research on blockchain technology?—A systematic review. PLoS One, 11(10), e0163477.CrossRefGoogle Scholar
  37. Zhao, J. L., Fan, S., & Yan, J. (2016). Overview of business innovations and research opportunities in blockchain and introduction to the special issue. Financial Innovation, 2, 28.  https://doi.org/10.1186/s40854-016-0049-2 CrossRefGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Gamze Öz Yalaman
    • 1
  • Hakan Yıldırım
    • 2
  1. 1.Department of Public Finance, Faculty of Economics and Business AdministrationEskişehir Osmangazi UniversityEskişehirTurkey
  2. 2.Centre for Distance EducationEskişehir Osmangazi UniversityEskişehirTurkey

Personalised recommendations

Cite chapter

Buy options