Do The Chinese Ultra-Rich Protect Their Wealth By Investing In Cryptocurrencies?One latest trick could involve cryptocurrencies. In fact, according to the co-founder of a crypto-asset fund, Dovey Wan, the mechanism is already in place for the wealthy elite in China.
Over-taxation has caused growing anxiety for the last several years in China. Wealth accumulation is unprecedented, with reports claiming two Chinese billionaires are born every week. To protect their wealth, many have created offshore accounts. Compared to 2012, the total Chinese offshore assets doubled last year. Moreover, real estate is one of the most popular investments among the Chinese super-rich — especially in countries not part of the Common Reporting Standard (CRS), a financial information sharing agreement implemented on a global level. (CRS makes offshore/shell-company tracking much easier.) Another popular investment involves cryptocurrencies. There is no crypto reporting standard in China, and the assets cannot easily be seized. However, since a fiat-to-crypto transaction leaves traces, the Chinese rich don’t buy bitcoins from exchanges. Instead, they are actually investing in Bitcoin mining operations or hashrate ‘rentals.’ [bctt tweet=”The Chinese rich are investing in Bitcoin mining to avoid taxes.” username=”beincrypto”] By mining for bitcoins, their wealth is much harder to track and, basically, impossible to seize.
There is a macro factor that may contribute to various assets bloom (including US real estate and crypto assets), which is underestimated by many westerners:— Dovey 以德服人 Wan 🪐🦖 (@DoveyWan) January 25, 2019
China’s tax system overhaul and implementation of CRS
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Will The US Super-Rich Follow The Chinese Example?Meanwhile, in Western society, the rich and super-rich are in a similar situation. In the United States, there are louder and louder voices demanding social justice by overtaxing the wealthiest and shrinking the gap between the rich and the poor. Popular Democrat Alexandria Oscario-Ortez talked about a 70 percent tax on the rich, while Senator Elizabeth Warren has just proposed a two percent ‘wealth tax’ on Americans with at least $50 million in assets.
Ethereum and Cardano co-founder Charles Hoskinson is appalled by the tax because it would be applied, even if a person’s assets did not produce income. Crypto hedge fund manager Michael Novogratz also reacted to Warren’s proposal, claiming the Senator is accusing a whole socio-economic class of crimes — without evidence.
It's really sad to see this becoming normalized and acceptable policy. It's just good old fashion theft where I come from. How do you even determine net wealth? Should I have to forceably divest my assets at a loss to pay your tax? https://t.co/uKWQtJuIN4— Charles Hoskinson (@IOHK_Charles) January 25, 2019
It is safe to assume that many of the American super-rich have similar views to both Hoskinson and Novogratz — and would rather protect their wealth than pay more taxes. Like the Chinese, the ultra-rich in the US could turn to cryptocurrencies, an unseizable and hard-to-tax investment — especially if it is not linked to a bank account. However, this could lead to even more wealth inequality. What do you think? Will the world’s ultra-rich invest in cryptocurrencies to avoid taxes? Is such action condemnable? Share your thoughts in the comment section below!
While I actually am for a wealth tax, it is wholly unproductive to accuse a whole class of people of crimes with no evidence. Your smarter than that @ewarren Globalization and technology, both secular trends, have done more to create this disparity than any rigging. @AOC https://t.co/J7LXrl4A2Y— Mike Novogratz (@novogratz) January 25, 2019
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