Tax and the Normalisation of Cryptocurrency
In early November, the Commonwealth Bank announced that it is now Australia’s first bank to offer customers the ability to buy, sell and hold crypto assets, directly through the CommBank app. You know when the banks come on board, cryptocurrency has become normal.
But cryptocurrency is only one part of the blockchain universe. Non-fungible tokens or NFTs (fungible means interchangeable) are one-of-a-kind digital assets which are part of the Ethereum blockchain. An example is the CryptoKitties game that allows players to purchase, collect, breed, and sell unique virtual cats – and, before you laugh, the game transacted over $1 million in virtual cats in its first few days of launching.
NFTs are also rapidly rising in popularity in the art world because ownership of the asset is on the blockchain and in some cases, the artist can take a percentage of every transaction of that artwork – so, no more starving artists because they can generate an income from the asset over time not just on the first sale. A stellar example is the sale of an NFT artwork by the digital artist Beeple, which was sold at auction by Christies in March 2021 for $69 million (USD).
Let’s look at what the Australian Taxation Office has to say about some of the commonly asked questions about the implications of investing in blockchain.