Author: Iris, CryptoMiao
What do you think virtual currency is, currency, commodity or security?
Currently, some countries and regions around the world have begun discussing and judging the attributes of virtual currencies.
For example, the Financial Innovation and Technology Act (FIT for the 21st Century Act) passed by the United States in 2024 specifically divides virtual assets into "commodities" or "securities" and regulates them; Germany classifies virtual currencies as private currencies; and more countries, such as China and Dubai, classify virtual assets as property in certain cases.
However, as virtual currencies gradually become popular around the world, it is time to "standardize weights and measures."
On March 22, 2025, according to Cryptoslate, the International Monetary Fund (IMF) released the seventh edition of the Balance of Payments Manual (BPM7), which for the first time characterized Bitcoin (BTC) and similar virtual currencies and included them in the balance of payments statement.
This is the first time that the IMF has systematically defined the status of digital assets in the global financial statistics system. Although this classification does not mean regulatory authorization, its authority is bound to have a profound impact on central banks, finance ministries, tax agencies and even the crypto industry itself.
However, before discussing the impact, Attorney Mankiw would like to talk to you about how authoritative the IMF is.
Who is the IMF?
IMF, the full name of the International Monetary Fund, sounds like a financial organization "far away from us", but in fact it plays a significant role in global financial rules.
So far, the IMF has been established for nearly 80 years and has more than 190 member countries. Similar to the FATF introduced to you before, the IMF is not an affiliated institution of any country, but a "financial advisor + international data officer + debt fire brigade" jointly built by governments of various countries. It is an existence that central banks and finance ministries of various countries cannot avoid.
The IMF has three main responsibilities:
First, keep an eye on global economic risks. If a country has high foreign debt, exchange rate problems, or financial problems, the IMF will issue a warning.
Second, provide loans and aid. If a country's foreign exchange reserves are in a critical situation, it can apply for a bailout loan from the IMF;
Third, and most importantly, what we are focusing on this time is the formulation of “global economic statistics standards”.
You can think of the IMF as the "chief accountant behind national financial statements." The balance of payments, capital account, and external balance sheet that we usually hear about all rely on the Balance of Payments Manual developed by the IMF.
As for individuals, although the IMF does not directly manage you like the SEC or the tax bureau, the statistical rules it sets will eventually be passed on step by step to each department that is specifically responsible for "supervising you":
How do the statistical offices of various countries count your assets?
How do the Ministry of Finance and the State Administration of Foreign Exchange monitor your capital flow?
The tax bureau and regulatory agencies decide whether to care about you and how to collect taxes from you.
Therefore, the seventh edition of the Balance of Payments Manual (BPM7) includes BTC and similar virtual currencies in the "statistical category", which actually sends a very clear signal to the world: virtual currency is no longer an asset class that can bypass reporting.
Although this signal may not immediately lead to the implementation of supervision, it will definitely become the starting point for "supervision that is actionable, based on evidence, and effective."
Establishment of regulatory standards
Now, let’s return to the section on virtual assets in the latest edition of the Balance of Payments Manual.
The document states that crypto assets (such as Bitcoin) that are not backed by liabilities should be classified as "non-productive, non-financial capital assets" and listed separately in the "capital account" of the balance of payments.
If you think that the IMF’s definition of virtual assets such as Bitcoin as “non-currency” means that regulation is relaxed, you may be mistaken. In fact, this classification may be the result that global regulators are most happy to see.
Why do you say that?
We mentioned at the beginning of the article that many countries or regions have long had differences in the classification of virtual assets, which has led to the dilemma of "everyone wants to regulate but no one can regulate" in cross-border and cross-regional supervision. Now, the IMF has directly concluded that Bitcoin and similar assets are not money or debt, but a kind of capital asset you hold, similar to gold, houses, and works of art.
This classification is perfect for regulatory agencies in various countries, because it means that such assets are no longer "gray assets outside the system" but can be included in the country's asset and liability statistics system, which means that they can be tracked, reported, and even taxed in the future.
It is also worth noting that BPM7 specifically mentions that stablecoins such as USDT and USDC, which are backed by liabilities, should be classified as "financial instruments". This also provides a direct reference for countries in the regulation of stablecoins, that is, regulation can refer to the same set of rules for financial products. In addition, platform tokens such as Ethereum (ETH) and Solana (SOL) may be regarded as equity-like instruments when held, reflecting their investment attributes.
Therefore, from this moment on, the supervision of virtual assets has a handle. With the handle, the three areas that are most directly affected are: declaration, taxation and compliance of capital flow.
Reporting obligations of holders
For a long time, Web3 has been anonymous and decentralized. Even if the data of virtual assets can be found on the chain, regulators do not know who holds these virtual assets.
But now, countries have reasons to include debt-free crypto assets in the statistics of "external capital accounts". This means that as a resident of a country, if the BTC, ETH, or DAO assets you control or hold involve non-local issuance, non-local custody, or the issuing and governance entities are located abroad, they may be included in the "external assets in the sense of international balance of payments", triggering the "foreign asset declaration" requirement.
This is just the first layer. The more critical layer is the second layer: domestic tax authorities have also begun to strengthen information disclosure requirements on "what you hold", and this has nothing to do with whether the virtual assets are "domestic" or "foreign".
Taking the United States as an example, if you are a tax resident, even if your assets are on a local U.S. trading platform such as Coinbase, or you control a non-custodial wallet address, once the assets you hold reach a certain amount, you may still need to report it on Form 8938.
Tax obligations of traders
Whether Bitcoin (BTC) is treated as a non-financial capital asset, or Ethereum (ETH) and Solana (SOL) are treated as reference equity instruments, they must be handled in accordance with "asset disposal" and tax obligations must be fulfilled based on realized profits.
Therefore, what virtual asset traders really need to pay attention to is: when will tax obligations arise and how to calculate taxable income?
For example, if you hold a certain token and then trade it for another token, and realize asset appreciation during the period of holding the token, it is likely to be recognized as capital gain, even if it is only a currency-to-currency transaction and not exchanged for stablecoins or fiat currencies.
Another example is the staking, airdrop and liquidity income of certain tokens. In some countries, represented by the United States, this type of passive income will be included in the taxable income (ordinary income) according to the market value when received, regardless of whether you have conducted transactions or realized profits.
In addition, if you are a creator or protocol developer and obtain tokens, NFT sales revenue, or protocol fee sharing through on-chain transactions, these may be regarded as business or other taxable income and need to be included in personal or corporate income tax taxable income.
Compliance challenges in capital flows
If the entry of virtual assets changes the logic of "what to hold" and "paying taxes when moved", then the last unavoidable question is: where do these assets come from and where will they go.
For a long time, the flow of funds on the chain has been in a stage where technology is driven and supervision lags behind. After raising funds, the project party directly transfers the stablecoin to the developer wallet, and pays wages, grants or airdrops through multi-signature addresses. USDT transfers and BTC payments between users seem to be "moving on the chain by themselves", without banks, reports, or anyone setting up a checkpoint in the middle.
In the past, these fund flow events were understood as "freedom of trade" or "user experience", but under the new statistical caliber, they have become "capital account changes" or "financial account receipts and payments", and even in some countries, trigger applicable thresholds for foreign exchange and payment compliance. Supervision can be covered by existing policy tools.
For Web3 project parties, if the technical team is located in the country, but the funds are directly transferred from overseas wallets to the team wallet, once this structure is regarded as "fund repatriation" or "capital inflow" by regulators, they may have to explain the nature of the funds, fulfill reporting obligations, and even face penalties for fund freezing or foreign exchange violations.
For individual investors, using non-custodial wallets to receive stablecoin transfers and then withdrawing, exchanging or transferring them into fiat currency accounts may also be blocked by the trading platform's risk control system due to unclear source paths and complex counterparty identities, or they may be required to provide additional KYC and explanation of the source of funds.
Attorney Mankiw's Summary
It should be emphasized that BPM7 is not a regulatory rule. It will not directly determine how much tax you should pay, whether your money can be remitted, or immediately lead to KYC, audits, or asset freezes. But it does quietly change virtual assets from "unclear" to "classifiable" at the bottom of regulatory logic.
For regulators, this is a technical breakthrough: from "lack of regulatory basis" to "integration into the system". For the industry, this is a signal: Web3 assets are slowly entering the statistical caliber, policy model, and even law enforcement vision of the mainstream financial system.
Although the changes behind this will not immediately impact every user, they will have an impact on those who:
Project parties that still use the traditional "overseas receipt, domestic expenditure" structure
Users who use stablecoins to complete cross-border transactions
High net worth individuals holding a large amount of on-chain assets
For all parties, it is worthwhile to sort out the structure and prepare for compliance as early as possible. In particular, in the face of the increasingly stringent trend of on-chain identity recognition, on-chain tax interfaces, cross-border transaction verification and other systems in the future, the cost of active adaptation is much lower than that of passive response.
We understand that every Web3 practitioner and user is more accustomed to the narrative of "decentralization" and "free circulation". However, as shown by BPM7 this time, global supervision is not denying virtual assets, but looking for a set of expressions that can be "incorporated into the rules".
Now that the way the game is scored has begun to change, at least we have to learn to understand the scoreboard.
