Right from the start of this year, the Chinese government is attempting to throttle the use of tax havens by the Chinese millionaires as well as the high net worth individuals in China. The Chinese investors are flocking to tax havens in order to avoid paying a significant amount of tax.
Will cryptocurrencies be the new tax heavens for Chinese investors?
That is why there is a general assumption that the Chinese investors will turn to cryptocurrencies in order to park their money. If indeed, they turn to cryptocurrencies in order to park their money, the demand for cryptocurrencies in China will increase significantly. However, this is not as easy as it seems.
On the other hand, the Chinese government in order to crack down on tax evasion has been working along with the Organisation for Economic Cooperation and Development (OECD). It is following the Common Reporting Standards (CRS) which are followed by 83 countries. Due to this very reason, it is coming down pretty hard on the tax evaders.
As China is working with other countries to prevent tax evasion from their citizens, it is expected that in the coming few years, Switzerland, Luxembourg, as well as other tax heavens will cooperate with China to help it avoid tax evasion as well. That is why the wealthy citizens of China need to find some other way in order to park their funds.
Cryptocurrency is the perfect alternative in such a case. This is because it is banned in China. Moreover, cryptocurrency can be moved pretty swiftly from one account to another. The information which needs to be disclosed in order to buy cryptocurrencies is still minimal. There are plenty of fully anonymous cryptocurrencies as well. Due to this very reason, it is easier for the high net worth individuals in China to park their funds in cryptocurrency.
With that being said, countries all over the world are urging the cryptocurrency exchanges in order to become more and more transparent and to abide by the anti-money laundering laws as well. If that happens, it will once again become very difficult for Chinese investors to park their money in cryptocurrencies. That is why this cat and mouse game is surely going to continue. What remains to be seen is whether the next stage is set for fighting is over cryptocurrency Holdings or not.