Abstract
The proliferation of cryptocurrencies and the remarkable expansion of novel economic practices associated with them pose an unprecedented challenge to established norms of taxation and market regulation. Drawing on two years of fieldwork, surveys, as well as big data analysis of the most valuable 100 cryptocurrencies’ white papers and the terms of service agreements of all cryptocurrency exchange platforms, this paper proposes an evidence-based framework to design a novel regulation and taxation approach to cryptocurrencies and their markets by using the US as case study. This new framework calls for approaching cryptocurrencies as data money. Drawing on the material political economy of new digital financial practices, the paper locates the universe of taxable events and invisible/vague regulation areas by approaching exchange platforms as stacked economization processes. We need to make sense of these new economic spaces in order to imagine more effective regulative instruments addressing questions of economic actor protection and efficiency. The paper concludes by proposing a new instrument of taxation (Data Money Tax) and a dynamic regulative approach to cryptocurrency exchange platforms (Stack Regulation).
Highlights
World economies revolve around 180 fiat currencies issued by states and marketed by banks
None appear certain about which approach to take with cryptocurrencies and their markets. This confusion gives birth to varying, or at times even conflicting definitions of cryptocurrency in different regulatory institutions, even within the same country, as we see in the US. How to address this problem? By drawing on the US as a case study, this paper argues that we can benefit from the variety in social scientific perspectives to imagine a unitary and more effective framework to approach the regulation of crypto-economies and taxation of income accruing from cryptocurrencies
Based on research that analyzed all cryptocurrency markets’ terms of use agreements and ethnographical fieldwork in one exchange (Caliskan 2021a; Birbil and Caliskan 2020), this paper argues that these exchange platforms extend beyond market relations in that they fulfil a multiplicity of functions—such as banking, exchange infrastructuring, minting, payment system maintenance, software development, security, and centralized extra-blockchain accounting
Summary
World economies revolve around 180 fiat currencies issued by states and marketed by banks. Unlike under-digitalized economic relations that draw on the unitary exchange infrastructures of auctions, out-cries, computerized transfers, and the like, hyper-digitalized crypto-platform work takes place in digital socio-technical spaces where users and makers simultaneously imagine, build, operate, and invert stack economization with invisible taxable events and under-regulated yet substantial economic activities These two novel economic concepts, Data Money and Stack Economization, can help us to more effectively address contemporary challenges associated with the new economies based on cryptocurrencies. By taxing data monies in terms of the same materiality of money, taxation authorities can simplify tax compliance, increase their revenue, make visible a more comprehensive taxable event portfolio, and, foster new cryptoeconomic innovation Would this lead to a declining importance of fiat currencies in world economies and the undermining of states’ democratically accountable governance of economic life?
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