Australian Taxation Office Clarifies Capital Gains Tax Treatment for DeFi and Wrapped Tokens

According to Cointelegraph, the Australian Taxation Office (ATO) has issued guidance on capital gains tax (CGT) treatment of decentralized finance (DeFi) and wrapping crypto tokens for individuals. The ATO intends to continue taxing Australians on capital gains when wrapping and unwrapping tokens. In May 2022, the ATO outlined crypto capital gains as one of four key focus areas. The Australian taxman recently clarified a range of actions considered taxable in its jurisdiction. The transfer of crypto assets to an address that the sender does not control or that already holds a balance will be regarded as a taxable CGT event, according to the ATO. The capital proceeds for the CGT event are equal to the market value of the property received in return for transferring the crypto asset. However, the CGT event will trigger depending on whether the individual recorded a capital gain or loss. A similar approach has been considered for taxing liquidity pool users and providers, and DeFi interest and rewards. In addition, wrapping and unwrapping tokens will also be subject to triggering a CGT event. Chloe White, the managing director of Genesis Block and an advisor to Blockchain Australia, claimed that the ATO is in breach of the technology neutrality principle, which ultimately impacts the financial future of young Australians. In other news, local crypto exchange CoinSpot reportedly got hacked for $2.4 million in a probable private key compromise over at least one of its hot wallets. Etherscan shows a transaction totaling 1,262 Ether (ETH) — worth $2.4 million — was moved from a known CoinSpot wallet to the alleged hacker's wallet. Subsequent investigations found the stolen ETH was being swapped for Bitcoin (BTC) via THORChain and spread out across different wallet addresses.