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A crypto transaction tax for expanded social protection in crises
Brief about:
Journal Article (2024)
Written by:
Proposes an international tax on crypto trading to enhance social protection systems during crises.
Mobilizing resources to support vulnerable populations during emergencies is a widely recognized principle. However, international financial cooperation, as seen during the COVID-19 pandemic, often falls short, with much assistance provided as loans, exacerbating debt burdens. In 2023, unmet emergency food aid needs increased by 23%, and only 35% of requested international funding for hunger relief was fulfilled. The paper suggests that increasing domestic and international revenue through taxation, specifically a transaction tax on crypto trading, could address these shortfalls. The G20’s crypto roadmap aims to integrate crypto trading into regulatory frameworks to mitigate risks such as fiscal losses and threats to global financial stability. The roadmap’s universal adoption is crucial to prevent regulatory arbitrage, with oversight included in International Monetary Fund (IMF) consultations and Financial Sector Assessment Programs (FSAPs).
Key findings
- A transaction tax on crypto trading could generate significant revenue for emergency social protection.Evidence
The International Monetary Fund (IMF) estimated that a 0.1% tax on all crypto transactions in 2021 could have raised US$15.8 billion, while a 0.2% tax could have generated over US$30 billion. In comparison, global humanitarian aid contributions in 2023 totaled US$34 billion.
What it meansImplementing a crypto transaction tax could provide substantial funds for emergency social protection, addressing deficits in international financial support systems.
- Taxing crypto trading profits is becoming more common as governments seek to increase revenue.Evidence
At least 25 governments tax financial trading on registered platforms. India taxes crypto trading profits at 30%, similar to gambling winnings. The United States treats crypto trading like other investment assets.
What it meansExpanding taxation of crypto trading profits could provide a reliable revenue source for governments, supporting social protection systems during crises.
Proposed action
- Need resources to support developing countries during emergencies
Governments should jointly adopt crypto transaction tax and a central mechanism to distribute funds when needed.
Political mobilization to build momentum for such a tax
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A crypto transaction tax for expanded social protection in crises
Cite this brief: Herman, Barry. 'A crypto transaction tax for expanded social protection in crises'. Acume. https://www.acume.org/r/a-crypto-transaction-tax-for-expanded-social-protection-in-crises/
Brief created by: Dr Barry Herman | Year brief made: 2025
Original research:
- Herman, B., ‘A crypto transaction tax for expanded social protection in crises’ Online first November 2024 (pp. 1–5) https://doi.org/10.1177/14680181241290153. – https://journals.sagepub.com/doi/full/10.1177/14680181241290153
Research brief:
Mobilizing resources to support vulnerable populations during emergencies is a widely recognized principle. However, international financial cooperation, as seen during the COVID-19 pandemic, often falls short, with much assistance provided as loans, exacerbating debt burdens. In 2023, unmet emergency food aid needs increased by 23%, and only 35% of requested international funding for hunger relief…
Mobilizing resources to support vulnerable populations during emergencies is a widely recognized principle. However, international financial cooperation, as seen during the COVID-19 pandemic, often falls short, with much assistance provided as loans, exacerbating debt burdens. In 2023, unmet emergency food aid needs increased by 23%, and only 35% of requested international funding for hunger relief was fulfilled. The paper suggests that increasing domestic and international revenue through taxation, specifically a transaction tax on crypto trading, could address these shortfalls. The G20’s crypto roadmap aims to integrate crypto trading into regulatory frameworks to mitigate risks such as fiscal losses and threats to global financial stability. The roadmap’s universal adoption is crucial to prevent regulatory arbitrage, with oversight included in International Monetary Fund (IMF) consultations and Financial Sector Assessment Programs (FSAPs).
Findings:
A transaction tax on crypto trading could generate significant revenue for emergency social protection.
The International Monetary Fund (IMF) estimated that a 0.1% tax on all crypto transactions in 2021 could have raised US$15.8 billion, while a 0.2% tax could have generated over US$30 billion. In comparison, global humanitarian aid contributions in 2023 totaled US$34 billion.
Implementing a crypto transaction tax could provide substantial funds for emergency social protection, addressing deficits in international financial support systems.
Taxing crypto trading profits is becoming more common as governments seek to increase revenue.
At least 25 governments tax financial trading on registered platforms. India taxes crypto trading profits at 30%, similar to gambling winnings. The United States treats crypto trading like other investment assets.
Expanding taxation of crypto trading profits could provide a reliable revenue source for governments, supporting social protection systems during crises.
Advice:
Need resources to support developing countries during emergencies
- Political mobilization to build momentum for such a tax