While FinTax was having this conversation, the global regulatory pressure around crypto assets kept rising. Countries are stepping up efforts to exchange and track tax information for on-chain assets, offshore accounts, and cross-border transactions. In this talk, Calix(CEO & Co-Founder at FinTax) and William(Coo at FinTax) draw from their own practical experience in cross-border tax and on-chain operations to discuss hot topics like global tax compliance for crypto assets, tax planning, and the evolving push-and-pull with global regulators. They also share their vision for an ideal Web3 tax system. Using real-life cases, they unpack the tax logic behind crypto exchanges, DeFi, mining, airdrops, and other scenarios.

Who Should We Pay Taxes to for Web3 Income?

Calix:

William, let me start with a “soul question.” You’re also into mining, and sometimes your company pays out bonuses in crypto. For income like this, how do you usually handle your tax obligations?

William:

That’s a very real question. I fully agree with the point you mentioned before: since we benefit from the infrastructure and business environment provided by a certain country or region, paying taxes there is only reasonable. But reality is never that simple. Our clients are spread across North America, Europe, the Middle East, and other markets — so this income depends on conditions offered by multiple places, making it hard to pin down a single location.

For me personally, the company has multiple entities in different regions, but when it comes to me as an individual, I still need to figure out exactly which markets and clients contributed to this bonus. Although I mainly deal with U.S. clients, and most of the revenue comes from the U.S., it’s still really hard to say for sure who should get that tax.

All in all, I’m definitely willing to pay my taxes — the problem is just figuring out who gets the money. After all, how this income comes about doesn’t depend entirely on where I physically am.

Calix:

Yeah, I think you’ve hit on the key point. In Web3 projects like ours, the clients and the business itself are cross-country and cross-region. It’s hard to attribute the income precisely to one place. Economic activity is related to the customer base, but also to the platform, networks, and infrastructure you’re using. So figuring out who ultimately gets the tax is definitely worth digging into.

Honestly, even though I’ve worked in tax for years, I still get stumped by this. Under the current tax laws, I might be a tax resident of mainland China, or maybe have tax obligations in Singapore — but my business is mainly for the North American market, and sometimes there are salaries paid through a Hong Kong company. If you go strictly by the letter of the tax law, maybe it seems clear. But what’s the most reasonable approach? That’s worth thinking about. For Web3 Participants, these discussions often go beyond what the traditional tax framework can fully cover.

William:

Exactly. I think the core issue is that global tax regulatory systems just can’t keep pace with tech and industry developments. Regulators keep trying to catch up, but industry shifts and tech innovation are always one step ahead. This “chasing” state might be around for a long time — it’s always a dynamic balance between regulation and the industry.

A Case: Mainland Chinese Individual Asked to Pay Back Taxes on Crypto Trading

Calix:

Lately there’s been a couple of hot topics on Crypto Twitter in Chinese circles. One is about the Zhejiang tax bureau’s announcement that someone was asked to pay back taxes because of crypto trading. Through some channels, we learned that after CRS information exchange, the tax bureau found some unusual balance in his overseas bank account and asked him to explain the source of funds. He said it was investment income, so he had to pay tax on it — and it turned out this investment involved crypto.

To me, this kind of case isn’t surprising at all. It’s exactly my area of expertise, so it seems pretty normal and typical. William, you’ve been doing on-chain projects for a long time, like DeFi and mining. What do you think about this case?

William:

It’s definitely representative. We ourselves expected long ago that crypto trading would eventually get taxed. But when it really happens nearby — especially for many Chinese — it’s still a shock. Traditional DeFi or purely on-chain activities have always been harder to regulate, and a lot of it relies on users’ self-reporting. There really have been regulatory hurdles that kept tax authorities from fully enforcing rules on these more niche, scattered, hard-to-trace on-chain activities.

Why is it happening so “on time” now? It’s linked to other trends in the industry. There have been reports lately of some U.S. stock investors getting text messages or calls about paying back taxes, which shows regulators are getting stricter about tracking individuals’ offshore income — and the first entry point is overseas securities investments.

The logic is clear: U.S. stocks and crypto are increasingly intertwined. From Robinhood to Asia’s Tiger Brokers, Futu, even Guotai Junan International — many brokerages are dealing with crypto assets. It’s really hard to separate U.S. stocks from crypto anymore. Once you look at all offshore income comprehensively, checking U.S. stocks naturally brings crypto into view — especially since crypto assets have grown big enough to matter.

This “stock-crypto combo” isn’t going away anytime soon. In the U.S., some companies are trying to tokenize U.S. stocks. In Asia, it’s the reverse — putting crypto assets into listed companies to boost share prices and drive up secondary market performance. There’s profit motivation behind this combination, so whether it’s “stocks turning into tokens” or “tokens put into stocks,” the connection just keeps growing, making “taxing crypto trading” inevitable.

Overall, crypto assets and the stock market are tightly linked. As this trend continues, tax issues for crypto trading will become more rigid, with less and less room to dodge.

Calix:

That’s a pretty fresh perspective. I hadn’t really thought deeply about it from this “stock-crypto linkage” angle. For stock investments, people are used to paying taxes where they earn the money — whether it’s capital gains tax or business income from quant trading, the framework is pretty clear.

But for crypto, in some places — especially mainland China — there’s still a gray area around “should you pay tax, and if so, what kind?” But seeing how the business models for stocks and tokens evolve, this line of reasoning is actually insightful and reminds everyone that this is a new problem we’ll have to watch long term.

The Ongoing Tension Between Regulation and Tax Avoidance

William:

Calix, with all your years of frontline tax experience, now that this door has been opened, do you think some people will steer clear of crypto because they’re worried about tax risks? Or will there still be people who push the limits to dodge taxes, or just don’t report at all, and keep operating big in crypto? What impact will that have on the overall industry trend?

Calix:

That’s a pretty classic real-world question. I’ve always felt that regulation and “anti-regulation” always coexist — it’s not unique to crypto; it’s the same in traditional industries too. From a tax authority or any regulator’s perspective, they obviously want to collect every dollar they can. From the taxpayer’s perspective, no matter where they are, everyone wants to legally minimize taxes or lower their burden — these two goals are naturally opposed.

In my experience, this dynamic is almost hardwired into human nature. It’s always a cycle of conflict, balance, more conflict, more balance, and so on. Especially in recent years, regulatory tools are getting more diverse and tech-driven. In mainland China, for example, tax oversight capabilities have improved rapidly, and information systems are getting stronger. But at the same time, ways to dodge taxes have also evolved. Early on, it was just cash deals, hidden income, money laundering — the usual old-school tricks. Here, when I say “tax avoidance,” I mean illegal evasion.

Then crypto came along, which gave some taxpayers a new sandbox to play in. For quite a long time, crypto was pretty hard for tax authorities to track. Even if some regulators had on-chain tracing capabilities, it was often hard to fully enforce when it came down to actual tax collection. So some people really did enjoy a “sweet spot” during this time.

But in the future, the core issue will be scale. In the early crypto days (2013 to 2017), a lot of big mining operations and miners actually took tax and compliance seriously — compliance was the baseline for doing business. But there were definitely large players who still took big risks to evade taxes. These two realities have always coexisted.

Looking at the trend, early “wild west” days meant less focus on compliance, but now more and more big institutions put compliance first. In Hong Kong, Singapore, Europe, the U.S. — all these major markets — regulators, especially tax authorities, understand crypto assets better and better, and this trend is irreversible.

For individual investors — like retail traders or employees in Web3 projects — whether you can stay compliant really depends on the amount involved. If it’s small, just doing the necessary reporting properly is usually enough. Enforcement also needs to consider cost versus benefit, unless there are high-profile “showcase” cases — like the recent “paid tens of thousands in back taxes” story. The amount wasn’t huge, but it serves as a warning.

So overall, big institutions will only get more serious about compliance because it’s the foundation for sustainable operations. For retail individuals, it’s just like the real world — it ultimately comes down to how big the amounts are.

Where the Line Blurs: Undeclared Income vs. Compliant Assets

William:

I think there’s an interesting point here. A lot of people feel that paying taxes is, in a sense, proof that your income or assets are legit. But in crypto, to put it bluntly, there’s quite a bit of “rug-pulling” going on — basically shady financial maneuvers. These can also generate big profits. So if these people pay taxes as required, does that mean they’re “laundering” what’s basically illicit money through taxes? This might be a bit sensitive, but what’s your take?

Calix:

That’s a great question. I often think about where to draw that line myself. I believe paying or not paying taxes only proves you’ve fulfilled your tax obligation — but it can’t fundamentally prove that the funds are legitimate in a broader sense. If money also breaks other financial regulations — like SEC rules, or if it involves fraud or other financial crimes — paying your taxes doesn’t stop other agencies from punishing or clawing back the source of those funds.

For example, if the money involves money laundering, organized crime, or shady dealings that break international anti-money laundering rules — or if you’re in Hong Kong and break local customs or monetary authority rules — then paying tax in Hong Kong doesn’t mean the money stops being “dirty.” Tax compliance and the legal status of funds are two separate things under the law. You can’t just equate them.

William:

I agree. I’d add that I think the “tax” issue should have been put on the table much earlier. You have to first acknowledge that an asset is legitimate before you can even talk about taxes. If a sum of money can’t even be legally confirmed as an asset, it can’t be treated as taxable income — so there’s nothing to declare or pay tax on.

In China’s broader context, this area has always been pretty fuzzy — mostly because the legitimacy of many assets hasn’t been fully confirmed, so it’s hard for people to develop tax habits, and regulators have a tough time moving things forward. But globally, especially in most developed countries and regions, the legal status of crypto assets is already fairly clear. As long as the law says it’s legitimate, local tax authorities will require tax declarations on that income.

For many Chinese, if it’s determined to be overseas taxable income, in theory, it’s really hard to completely dodge it. The timing now is linked to gaps in international systems. In the past, people thought the tech barrier and anonymity of the blockchain made it too hard for regulators to track, so they held onto “fantasies.” But now, there’s a clear trend: the rise of RegTech (regulatory technology). It keeps boosting regulators’ information gathering and data analysis abilities, with lots of service companies supporting them too. This is gradually closing the information gap between regulators and the industry.

Tax Planning for Companies and Individuals in Crypto

William:

I want to ask you about a real-life scenario. Since it’s so hard for ordinary users to fully “escape” taxes, is it still possible to do any tax planning legally? From your practical experience, is there much room for companies or individuals in crypto to do tax planning?

Calix:

Let me start with a kind of “brutal” answer: for most ordinary people, the room for tax planning is actually very limited. The main reason is that ordinary people’s income sources are pretty simple — mostly salaries, bonuses, or some small allowances. These are fully recorded on the company’s end. Once a company reports truthfully, it’s hard for the individual to “optimize” anything extra.

So for ordinary individuals, the best they can do is make full use of the tax breaks already in their local laws — like personal exemptions, child support, elder support, marriage deductions, and so on. If you can fully use these basic deductions and do your required declarations properly, that’s already the “optimal plan.”

William:

Yeah, that does make the room sound pretty limited.

Calix:

But for high-net-worth individuals or companies, it’s a different story. Their income types and structures are usually more complex, with multiple sources, large transactions, and lots of cross-border tax issues. This diversity and complexity naturally create more room to maneuver.

Simply put, different types of income have different tax rates and methods. For example, salaries are taxed in full, but capital gains or dividends often enjoy relatively favorable rates or exemptions. Add in the tax differences between regions — mainland China, Hong Kong, Singapore, the U.S., Canada — all have different systems and burdens, so cross-border setups can create “arbitrage space.”

And don’t forget — whether in civil law or common law systems, tax law is expressed through text, so the wording often leaves “gray areas.” High-net-worth people and large institutions have the resources and professional advisors to study and use these spaces to legally optimize their tax burden.

This is why I’ve always felt that the middle class is actually one of the most squeezed groups. Their income looks decent — they work hard in companies or big tech firms, maybe make a few hundred thousand a year and do lots of overtime — but their income structure is simple, so they have almost no room for tax optimization. In contrast, high-net-worth folks and big institutions earn more and have more tools to work with.

So no matter which country you’re in, the middle class is usually the focus of tax authorities — their income crosses a sensitive threshold, but they don’t have enough resources to legally offset it. So they’re the easiest to “pinpoint.”

Mining, Airdrops, DeFi, and the Potential Tax Liabilities and Optimizations

William:

Calix, you just mentioned income structure, which I find really interesting. People used to have pretty simple income sources — just salaries and bonuses. But crypto really gave many middle-class and ordinary people a more diversified income stream — mining, airdrops, staking, DeFi yields, and so on. Like a mining rig might cost only $2,000 — buying a few is doable for the middle class, so it’s like running a mini “business.” This income brings new complexity. Can you briefly explain what tax obligations different types might involve?

Calix:

I think instead of just talking about “how to pay taxes,” I’d rather spend a moment on whether these activities have any legal wiggle room. It’s a sensitive topic, but I think it’s worth a quick overview.

Many ordinary people do have more diverse income streams now. But from a tax perspective, the core issue is: the income entity is still usually just you — you don’t have trusts, companies, or funds to spread out the tax burden. For example, in most places, mining is treated as business income; airdrops, if you just receive them but don’t dispose of them, generally don’t trigger taxes right away — it’s only when you convert to fiat or swap tokens, generating real income, that you need to report it. Staking or DeFi yields in some jurisdictions can be classified as capital gains, which usually have lower tax rates than business income, and in some places they’re not taxed at all.

So there really is some room for “reasonable classification.” For example, can you treat some high-tax business income as capital gains or other income types with lower rates, according to local laws? But the premise is that the tax law leaves some gray area, and regulators can’t fully and precisely trace all on-chain activity yet. Once the data is accessible, that room shrinks a lot.

So at its core, ordinary people doing large-scale tax planning isn’t very realistic — because all the income is in your name and can easily be classified as business income or another high-tax category. Comparatively, airdrops and forks, if local policies allow, can sometimes be treated with low taxes or deferred handling. Many people study how to reasonably shift high-tax parts into lower-tax or more favorable categories — but this depends on whether local law leaves enough space, and whether it’s done legally.

Practical Considerations for Digital Nomad Tax Residency

William:

I want to follow up on one more point: there are lots of people in crypto now calling themselves “digital nomads.” They might not have cared too much in the past — thinking as long as they’re not doing anything illegal, they can just pay taxes domestically. But do you think in the future more people will proactively change their tax residency to some overseas region? Like using double tax agreements to say, “I paid taxes in Singapore, so I don’t need to pay again in mainland China.” Will this path become a more popular legal strategy?

Calix:

That’s actually a fairly legitimate approach — making use of different tax jurisdictions to lower your overall tax burden. But I’d also remind people: no matter where you file taxes, you must keep good records of deposits, withdrawals, and transactions. These are key proof if the tax office asks questions, helping you avoid unnecessary headaches. Plus, there’s CRS (the Common Reporting Standard for automatic exchange of tax information) globally now — it’s hard to hide things forever. In the big picture, cross-border residency planning is worth considering, but your documents and records have to be complete, and you still have to file truthfully.

I’ll add one more example: someone I know recently asked about this. He works in Singapore, gets paid in USDT or fiat, and pays local taxes there. He asked: do I still need to file back in mainland China? In his case, he spends less than 183 days a year in China.

According to Chinese tax law, whether you’re a tax resident mainly depends on the “183-day rule.” But the finer rules and real-world practice also look at nationality, household registration, and main social ties. If all these connections are still in China, even if you’re overseas, you might still be seen as a Chinese tax resident and have to do a full reconciliation and deduct the tax you already paid. Plus, whether you hold a Singapore EP (Employment Pass), PR (Permanent Residency), or something else can also affect the outcome. There’s no fixed template for this — it really depends on your situation.

William:

So even if you spend less than 183 days a year in China, you can’t just assume you’re completely “safe.”

Calix:

Exactly — it’s not that absolute. In international tax law, there’s a “tie-breaker rule” that looks at your family relationships, economic center of interest, daily life track, and so on, judging step by step where your main tax residency is.

William:

Yeah, lots of people ignore that. Even if you live abroad and have a visa or residency abroad, if your main family and social connections are still back home, the “tie-breaker rule” often means you’ll still be considered a Chinese tax resident. So you really have to pay attention to that part.

Thoughts on the Future of Crypto Tax Systems

Calix:

Alright, William, let’s wrap up with a more open question to close out this talk.

From your personal point of view — as someone who’s been deep in crypto for years as a builder or user — what kind of tax system would be more user-friendly for Web3 Participants? Or put another way, what’s your ideal, most hoped-for tax model?

William:

This is just my personal view — it doesn’t represent any company stance.

I’ve always been pretty on board with the “sovereign individual” idea that’s native to crypto, and I’m a bit idealistic. I resonate with what Vitalik and others have said about the “Network State.” I really do believe at some point in the future, this kind of setup will sprout somewhere in the world and could even become an irreversible trend.

As time goes on, the infrastructure that humans rely on might shift more and more from the physical world to the digital one. For me now, maybe 80% is still physical and 20% is digital, but in the future, digital infrastructure will definitely outweigh the traditional physical environment.

It’s like how people in the internet age used to say, “Hardware is free, software costs money.” Some companies would give away phones for free but charge for content and services long-term. I think the future might be similar: the “hardware” part of the physical world will get lighter, while what you really keep paying for is digital services — and these services are delivered by networks.

From this angle, I really agree with the point you made before: blockchain infrastructure relies on physical resources like electricity, internet, and chips. Miners and nodes burn these resources to provide network services, so the money they make should pay most of the taxes in the physical world. For everyday users, they’re enjoying digital services from these miners and nodes, so they mainly pay “service fees” like gas fees to the network, which then gets passed back to the physical world’s tax system.

So in my ideal model, it’d be a two-layer structure:

Layer one: infrastructure providers (miners, nodes) pay taxes to the physical world.

Layer two: individual users pay fees through gas and other forms to the network, which then feeds back into real-world tax systems.

As people’s digital spending keeps growing, the direct tax burden on the physical world would gradually drop, while the blockchain network would function like a tiny autonomous tax system, with the gas mechanism and distribution structure handling the related real-world obligations.

Calix:

I think that’s a really imaginative and forward-looking idea. I also believe that as the crypto industry develops, it’ll carry more and more asset value in the future, and its deep integration with traditional finance will only get faster. It could replace parts of traditional finance that are inefficient or opaque, and that will definitely require matching legal systems and regulatory frameworks.

A lot of what you shared today has been really thought-provoking. When we do our current business, we need to keep thinking about what might happen in the future — and even try to push for some of these changes. One thing I’d add is the RWA (Real World Assets) direction. Right now, lots of assets going on-chain are still wrapped up through layers of packaging, nesting, and contract mapping — so on-chain and off-chain are still pretty far apart. But that might just be a transitional phase. If the legal system improves, asset information could be more directly and transparently on-chain, and maybe all that complex nesting will slowly disappear.

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