CBDCs are a different blockchain beast compared to crypto: Legge

Taxation will determine the future of DeFi and NFT: Legge

Michelle Legge, the head of crypto tax education at crypto tax calculator and portfolio tracker Koinly, stated that developments in the past few months from Biden’s executive order to the hyperinflation in the global economy have made conversations around CBDCs increasingly relevant. 

Central Bank Digital Currencies are the digital representation of a country’s physical currency issued by the central bank to usually enable fast and easy transactions and enforce greater control on monetary policy.

Legge stated that governments are hungry for CBDCs, explaining that they offer power and control leaning into the likes of China’s social credit system. Unlike the empowering future of Bitcoin, CBDCs are a “different blockchain beast altogether”, she said.  

When asked which of the well-discussed killer apps will stick, Legge pointed out that while a lot of progress has been done towards achieving retail use cases with DeFi’s, she hopes that the space will not be taxed into oblivion.

The expert also argued that NFTs presented a whole new array of opportunities in the crypto world and beyond:

“If the public can interface with “the blockchain” via pictures, then it’s logical to assume that anything we’re used to seeing on paper will go the way of a digitized, ownable NFT. 

What could this look like at the most basic level? Share certificates, graduation diplomas, medical records, insurance policies, birth certificates, passports, etc”

Legge further argued that similar to the gaming industry, the creation, distribution and management of proof-of-ownership NFT administration could spawn an industry of its own.  However, taxation regulations will play a key role in determining the success of NFTs, she added.

“….no one wants to face a tax bill for erroneously “profiting” from the “disposal” of a health insurance policy. It will need to be clear to all, the taxman included, that NFTs used in this way have a zero-dollar value.”