Shifting digital currency definitions: Current considerations in Australian and US tax law

Digital currency as an intangible asset is designed, in part, to circumvent the reach of regulatory bodies. As such, the emergence of this asset into global markets requires tax regulators to be particularly nimble with respect to regulation. This article reviews the rapidly shifting regulatory landscape of digital currency by comparing its definition, for tax purposes, as an intangible asset under Australian and US tax law. The article finds that reactive regulatory responses triggered a piecemeal inclusion of digital currencies into a pre-existing taxation framework, causing unintended regulatory consequences. The article concludes that the regulation of digital currency needs to be increasingly proactive, as the placement of new market products under an existing definitional framework leads to inconsistencies in regulatory application. While tax administration will not drive stabilisation of the digital marketplace, tax administrators might consider that regulation of digital currency, as a new hybrid intangible asset in a global marketplace, may provide an opportunity to consider forward-thinking global harmonisation.