As cryptos rise, so does the need for clear WTO rules

In light of the ongoing WTO deliberations on e-commerce taxation, the escalating significance of cryptocurrencies in facilitating cross-border transactions cannot be understated. The evolving digital landscape is witnessing a rapid uptake of cryptocurrencies, potentially reshaping the future dynamics of global trade

Experts feel that escalating significance of cryptocurrencies in facilitating cross-border transactions cannot be understated.

As the World Trade Organisation (WTO) debates taxation issues around e-commerce the scope of talks should be expanded to include trade in cryptocurrencies as these too involve cross-border transfer over electronic networks, a trade policy think tank Global Trade Research Initiative (GTRI) said. Currently, WTO members are discussing e-commerce under Joint Initiative on e-commerce and moratorium on countries from applying customs duties on electronic transmissions.

Talking to Bizz Buzz, Somdutta Singh, Founder & CEO, Assiduus Global Inc said, “In light of the ongoing WTO deliberations on e-commerce taxation, the escalating significance of cryptocurrencies in facilitating cross-border transactions cannot be understated. The evolving digital landscape is witnessing a rapid uptake of cryptocurrencies, potentially reshaping the future dynamics of global trade. It is incumbent upon WTO members to earnestly consider integrating discussions on digital currencies into the ongoing e-commerce discourse.”

This strategic alignment is paramount in recalibrating trade policies to suit the evolving contours of the digital economy, fostering a proactive and inclusive approach for the international trade community, she added.

As per the 1998 agreement between the WTO member countries e-commerce is not taxed. The moratorium on taxation is not permanent and is extended at every Ministerial Conference of the WTO that is held with a gap of two years. The WTO defines e-commerce as the electronic production, distribution, sale, or delivery of goods and services. This includes products like books, music, and videos transmitted digitally. At the WTO India, South Africa, Sri Lanka and Indonesia are aiming to get the moratorium on taxation of cross-border e-commerce lifted at the next ministerial meeting in Abu Dhabi.

“Both these negotiations need to factor in crypto currencies as the exchange of crypto currencies involves digital transmission which qualifies it as e-commerce transaction. Also crypto currencies may soon emerge as an important digital transaction enabler. WTO members must take a view as worldwide adoption of crypto is increasing,” the report prepared by GTRI founder Ajay Srivastava said. WTO Members must prioritise discussions on crypto currency under the ongoing two e-commerce negotiations before members start taking liberties with interpretation leading to disputes, he added.

The treatment of crypto-currencies and the diverse positions of nations like the USA and India will shape the future of WTO e-commerce negotiations, according to the report.

The rise of crypto-currency operating outside central banks has added complexity to discussions. As the crypto market garners increasing global attention, its classification under the WTO e-commerce framework remains ambiguous. The debate should pivot on whether the exchange of crypto-currency falls under ‘electronic transmissions’ in the e-commerce scope, Srivastava said.

According to estimates, the global streaming market is expected to grow to $330 billion by 2025 from $174 billion in 2020. The global social media market is expected to reach $ 124 billion by 2025, up from $94 billion in 2020. The United Nations Conference on Trade and Development has estimated the potential tariff revenue loss for developing countries every year due to the moratorium on e-transmissions at $10 billion, as compared to only $289 million for high-income countries.