Not ‘Super Tax Havens’ After All

When crypto-assets were first introduced, tax experts worried that they might become ‘super tax havens’. With over a decade and a half of hindsight, this article questions whether this tax-enforcement doomsday scenario has materialized or may yet materialize. The article’s conclusion is that the answer is ‘no’. To be sure, crypto-assets are an instrument of tax evasion, but they are not better (and maybe even worse) at facilitating tax evasion than traditional tools such as cash or secrecy jurisdictions. With some adjustments, traditional, time-tested mechanisms of tax enforcement can address tax evasion with cryptocurrencies at least as effectively as addressing any other form of tax evasion. The reason for this is rather simple: contrary to initial hopes (or warnings, depending on one’s perspective), the crypto-assets markets are not disintermediated, not decentralized, and not anonymous, and they are unlikely to become any of those things. If governments chose not to enforce tax laws in the context of crypto-assets, this would be a policy choice, not an inevitability attributable to the nature of blockchain technology.