Table of Contents
- Executive Summary
- Introduction
- About Our Organizations
- Methodology and Terminology
- First Principles of Civil Society
- Blockchain and Digital Currency
- Use Cases
- Key Findings
- Other Findings
- Conclusion
- Appendix 1: Virtual Currency Terminology
- Appendix 2: International Highlights
- Appendix 3: Australia
- Appendix 4: Bermuda
- Appendix 5: Canada
- Appendix 6: Denmark
- Appendix 7: Malta
- Appendix 8: Singapore
- Appendix 9: South Africa
- Appendix 10: Switzerland
- Appendix 11: United Kingdom
- Appendix 12: United States
Appendix 2: International Highlights
Note: These highlights are compiled for informational purposes only, based on information contemporary with this report’s publication. They are not meant to substitute for, and should not be used to substitute for, any comprehensive or particular legal analysis in the particular countries surveyed. Virtual currency legal considerations are likely to continue to evolve via new legislation, judicial rulings, and so on. If you would like to suggest new or additional information to add to this appendix, please contact BTA@newamerica.org
Australia, Bermuda, Canada, Denmark, Malta
| Australia | Bermuda | Canada | Denmark | Malta | |
|---|---|---|---|---|---|
| Use Cases: Are there notable examples of charities accepting donations of virtual currency? |
Australian [Bushfire Donation project](https://www.binance.charity/Australian-Bushfire-Donations) raised over $1,000,000. | Omega One, a virtual currency brokerage, pledged to donate 1 percent of cash raised via token sale to Bermuda charities. | Covenant House in Toronto [raised over $70,000](https://www.cbc.ca/news/canada/toronto/cryptocurrency-charity-event-1.4464304) in virtual currency donations for helping at-risk, homeless and trafficked youth. | The Dutch Red Cross accepts bitcoin donations. | The Malta Community Chest Foundation reportedly raised nearly $500 million in virtual currency donations during a 2018 fundraising campaign. |
| Acceptance: Are there additional requirements for charities accepting virtual currencies? |
Charities should [keep accounts with all records relating to virtual currency](https://www.ato.gov.au/general/gen/tax-treatment-of-crypto-currencies-in-australia---specifically-bitcoin/?anchor=Recordkeeping) donations received, including the value of the virtual currency in Australian Dollars at the time of the transaction. | The Bermuda Monetary Authority has released a [draft Digital Asset Custody Code of Practice](https://www.bma.bm/viewPDF/documents/2018-12-29-05-19-21-Digital-Asset-Custody-Code-of-Practice.pdf) containing guidelines for safeguarding digital assets. | Absent additional guidance, Canadian charities should follow the same acceptance and reporting requirements typical of other [Canadian charitable donations](https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/operating-a-registered-charity/issuing-receipts.html). | In 2014, the Danish Tax Authority published a [binding interpretation](https://www.loc.gov/law/help/cryptoassets/cryptoasset-regulation.pdf) of law (in reply to a public question from taxpayer) declaring that invoices cannot be denominated in virtual currency but must instead be issued in the official Danish currency (Kroner) or another recognized currency. | Malta’s Virtual Financial Assets Act (VFAA) regulates virtual currency service providers. |
| Asset class, valuation, and tax issues: Are there any additional steps charities and/or donors must take to receive tax benefits from donations of virtual currencies? |
Gifts exceeding $5,000 [require valuation](https://www.ato.gov.au/non-profit/gifts-and-fundraising/claiming-tax-deductions/how-donors-get-valuations/) from the Australian Tax Office (ATO). Donors [must keep](https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia---specifically-bitcoin/?page=4) records of: date of transaction, value of virtual currency at time of transaction, what the transaction was for and who the other party was (even if it’s just a virtual currency address). |
There are no specific taxes on income, capital gains, or other taxes on virtual currency in Bermuda. | Currently, Canada’s Income Tax Act does not allow charitable virtual currency donations to be tax-benefited like donations of shares, mutual funds, and other non-cash contributions. A Canadian Parliamentarian has [introduced a bill](https://www.parl.ca/DocumentViewer/en/42-1/bill/C-452/first-reading) to expand the Income Tax Act to include virtual currency donations as an approved tax-deductible category, but the Bill has yet to pass into law. | N/A | There do not appear to be tax incentives for charitable giving of virtual currencies in Malta. |
| AML/CFT: Do heightened anti-money laundering (AML) and countering the financing of terrorism (CFT) measures apply to donations of virtual currencies? |
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act (2017) brings providers of digital currency exchanges within the AML/CFT legal framework, requiring such entities to be registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC), maintain an AML/CFT program, and meet certain recording and reporting obligations. | Digital asset businesses in Bermuda are required to establish AML/CFT policies, including ongoing monitoring, record-keeping, risk assessment and risk management. | Companies dealing in virtual currencies are required to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), keep records, and follow AML/CFT compliance and reporting guidelines. | Denmark follows AMLD5, including its provisions on virtual currencies. Denmark does not appear to have enacted additional requirements beyond those imposed by the EU. | Because Malta is a member of the EU, the EU’s AMLD5 provisions related to virtual currency AML/CFT presumably apply. |
| Holding/Liquidation: Are there specific rules governing the ability of charitable organizations to hold or liquidate virtual currencies received as donations? |
Australian charity board members are obligated to disclose any actual or perceived conflicts of interest, and ensure that the financial affairs of the charity are managed responsibly (per Australian Charities and Nonprofit Commission Governance Standards), which may in some cases affect a charity’s ability to hold or liquidate virtual currency donations. | If a person or business is holding assets on behalf of another, that person will be regarded as a digital asset services vendor subject to the Digital Asset Business Act (DABA). If a charity is instead holding assets on its own behalf, the DABA licensing requirements should not be imposed. | Virtual currency custodians in Canada [are required](https://www.osc.gov.on.ca/en/SecuritiesLaw_csa_20170824_cryptocurrency-offerings.htm) to have expertise relative to holding virtual currencies. | No specific legislative provisions governing custodianship of virtual currencies or cryptocurrencies exist under Danish law. In a 2013 statement, the Financial Supervisory Authority emphasized that it had evaluated the use of the cryptocurrency system and found that cryptocurrencies such as bitcoin do not fall under any of the financial services categories, including the issuing of electronic money, payment for services, currency exchanges, or the issuing of mortgages; thus, the Authority concluded, such virtual currency activity was not covered under current financial regulations. | There is currently no official position on the [time period required for income from a disposition of virtual currency](https://www.acc.com/sites/default/files/resources/vl/membersonly/Article/1489775_1.pdf) to be treated as “capital gain” subject to lower taxation. |
Singapore, South Africa, Switzerland, U.K., U.S.
| Singapore | South Africa | Switzerland | U.K. | U.S. | |
|---|---|---|---|---|---|
| Use Cases: Are there notable examples of charities accepting donations of virtual currency? |
The Monetary Authority of Singapore (MAS) has [prototyped a blockchain-based payments network that would be interoperable with a number of different virtual currencies](https://www.mas.gov.sg/news/media-releases/2019/mas-helps-develop-blockchain-based-prototype-for-multi-currency-payments), although the project has yet to advance to testing among the wider public, including CSOs. | At South Africa’s first “Blockchain Hackathon” in 2018, a [student team designed a token-based direct monetary aid platform that bypassed traditional banking systems](http://www.gsbbusinessreview.gsb.uct.ac.za/using-blockchain-to-stamp-out-development-aid-fraud/), but it is unclear if the project ever proceeded beyond this initial proposal. | There are a number of relatively new foundations that issue, accept, and/or hold virtual currency, often on behalf of a software project or group of software developers. While these are not civil society groups or humanitarian non-profits in the traditional sense, they are structured under Swiss law as not-for-profit, largely tax-exempt organizations and possess large amounts of virtual currency. Swiss-based non-profit foundations [have raised the equivalent of over $1 billion](https://www.bitcoinsuisse.com/company/) in virtual currencies. | Shackwell Lane mosque in Hackney [became](https://www.independent.co.uk/life-style/gadgets-and-tech/news/bitcoin-halal-london-mosque-donations-cryptocurrency-islam-sharia-law-muslim-ramadan-zakat-a8364846.html) the first known mosque in the world to accept virtual currency donations in 2018. | The Wikimedia Foundation, which curates Wikipedia, [started accepting virtual currency donations](https://blog.wikimedia.org/2014/07/30/wikimedia-foundation-now-accepts-bitcoin/) in 2014. |
| Acceptance: Are there additional requirements for charities accepting virtual currencies? |
N/A | Charities hoping to accept virtual currency donations via exchanges should ensure those exchanges still have working banking relationships so it can convert those holdings into fiat -- for example, in November 2019 [a major South African bank closed the accounts of all its virtual currency exchange customers, citing regulatory uncertainty](https://mybroadband.co.za/news/cryptocurrency/328355-fnb-shuts-down-south-african-cryptocurrency-linked-bank-accounts.html). | Charitable organizations are not required to themselves set up a “wallet” to receive virtual currency in the form of sales or donations, and may enlist a bank to receive donations on their behalf. | U.K. charities are legally required to diversify investments, so (depending on the balance of a charity’s portfolio following a virtual currency donation) it may have to liquidate at least some portion of accepted virtual currency. | No virtual-currency-specific guidelines; charities in the United States often choose to partner with a regulated exchange to process payments, though some also self-custody and invite donations to an address in the charity’s control. |
| Asset class, valuation, and tax issues: Are there any additional steps charities and/or donors must take to receive tax benefits from donations of virtual currencies? |
There are no capital gains taxes in Singapore; tax authorities have stated that virtual currency exchange rate at the point of transaction [can be used](https://www.iras.gov.sg/irashome/Businesses/Companies/Working-out-Corporate-Income-Taxes/Specific-topics/Income-Tax-Treatment-of-Virtual-Currencies/) for tax accounting purposes. | Virtual currencies are generally unregulated in South Africa. At the time of this writing, several bills have been introduced to regulate virtual currencies, but none have been enacted. Consequently, South Africa does not tax gains or losses related to cryptocurrencies. However, proposed amendments seek to provide clarification. For example, the Income Tax Act, as currently drafted, seeks to define cryptocurrencies as financial instruments for purposes of calculating gains and losses. | The classification of a given virtual currency can vary by Swiss agency and by statutory scheme, but is primarily regulated by FINMA and its existing guidance. FINMA differentiates between payment tokens (cryptocurrencies), utility tokens, and asset tokens, while noting that these classifications are not mutually exclusive, and tokens with multiple characteristics can be deemed to be both securities and means of payment. Valuation is typically determined by exchange rate at time of donation. | Charitable donations of virtual currencies [exempt the donor from any capital gains taxes](https://perma.cc/KJ8N-T26S) on those donated virtual currencies. | Typically, donors can deduct charitable contributions made to qualified organizations up to a certain percent of the donor’s adjusted gross income. The IRS requires substantiation of non-cash charitable contributions, including donations of virtual currency, if the claimed value of the deductible donation is greater than $5,000. Substantiation requires a donor to obtain contemporaneous written acknowledgement, a qualified appraisal prepared by a qualified appraiser, and a completed Form 8283, Section B, that is filed with the return claiming the deduction. |
| AML/CFT: Do heightened anti-money laundering (AML) and combating the financing of terrorism (CFT) measures apply to donations of virtual currencies? |
All persons in Singapore (presumably including charities) are required to report suspicious virtual currency transactions with the Suspicious Transaction Reporting Office, Commercial Affairs Department of the Singapore Police Force pursuant to [section 39](https://www.mas.gov.sg/~/media/MAS/News%20and%20Publications/Monographs%20and%20Information%20Papers/Guide%20to%20Digital%20Token%20Offerings%20last%20updated%20on%2030%20Nov.pdf) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act. | South Africa's AML/CFT laws are not currently applicable to virtual currencies. That said, the Financial Intelligence Centre Act 38 of 2001 (FICA) requires persons who receive or about to receive funds related to terrorism financing to report it to the FIC. | In Switzerland, there do not appear to be virtual-currency-specific guidelines regarding application of AML and/or CFT laws. Charities would generally follow the same guidelines they follow for ordinary donations, which, as explained in more detail below, include a responsibility to clarify the origin of large contributions. | U.K. charities [are allowed to accept anonymous donations](https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/677252/Chapter2new.pdf), so long as they look out for suspicious circumstances and put adequate safeguards in place. This guidance would presumably apply also to anonymous donations of virtual currencies.
The U.K. Parliament [transposed](https://www.gov.uk/government/consultations/transposition-of-the-fifth-money-laundering-directive) the EU’s Fifth Money Laundering Directive in January 2020, which subjects U.K. virtual currency users to the EU’s more robust virtual currency restrictions and regulatory framework. |
While U.S. charities do not appear required to conduct AML on their donors, virtual currency exchanges (with whom charities often partner to accept virtual currency donations, and custody these donations on the charities’ behalfs) are required to follow AML/CFT policies, as well as state-by-state registration as a money services business (MSB). |
| Holding/Liquidation: Are there specific rules governing the ability of charitable organizations to hold or liquidate virtual currencies received as donations? |
N/A | N/A | Swiss law has no explicit regulations on asset management, and does not appear to restrict the ability of charitable organizations to hold virtual currencies received as donations, nor impose liquidation requirements on charities. | N/A | If a U.S.-based charity sells, exchanges, or otherwise disposes of non-cash charitable deduction property (including virtual currency) within three years after receiving the donation, IRS guidance also directs them to file Form 8282 and gives the original donor a copy of that form. |