In 2022, tax authorities and other government agencies will devote close attention to regulating the NFT industry. Representatives of the Baseley & Partners agency said this on ForkLog’s conference “Why NFTs Are So Expensive?”.
Among the main regulatory risks in the NFT space, lawyers named tax evasion on income from sales, the classification of such tokens as securities, money laundering, violations of intellectual property rights, and data-protection laws.
Although NFT regulation remains absent in most jurisdictions, transactions involving them are still taxable, the experts noted.
Sales of such tokens are typically subject to income tax, and exchanging them is also a taxable event, says Bogdan Popovchenko, a legal analyst at Baseley & Partners:
“If you swap an NFT worth $1,000 for an NFT valued at $2,000, you have effectively realized a profit on the difference in value of these assets. And that amount should be taxable.”
Lawyers note a trend toward NFT market regulation in 2022:
“There is a view that regulators deliberately let the industry grow to a certain size to increase tax payments.”
In January, trading volume of non-fungible tokens surpassed $6.86 billion.
The NFT market has already attracted the attention of the US Internal Revenue Service, and at the Royal United Services Institute for Defence and Security Studies saw money-laundering risks through such assets.
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