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Australia Updates Its Capital Gains Tax Guidance to Include Wrapped Tokens and DeFi
Last year, the Australian Taxation Office (ATO) warned cryptocurrency investors that capital gains and losses must be reported every time a digital asset is sold.
Updated Nov 14, 2023, 12:53 p.m. Published Nov 14, 2023, 11:06 a.m.
Australia's tax authority has clarified its view that its capital gains tax on crypto products also extends to wrapped tokens or token interaction with decentralized lending protocols, according to an updated guidance.
Last year, the Australian Taxation Office (ATO) warned cryptocurrency investors that capital gains and losses must be reported every time a digital asset, including non-fungible tokens (NFT), is sold. The latest update includes wrapped tokens or many “DeFi "lending” and "borrowing arrangements” or, in general, any time you transfer a crypto asset to an address that you don’t control.
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“When you wrap or unwrap a crypto asset, you exchange one crypto asset for another and a CGT (Capital Gains Tax) event happens, the update said. “The capital proceeds for the CGT event equal the market value of the wrapped token at the time of the exchange."
This includes liquidity pools and providers with a CGT event happening when you deposit or withdraw crypto assets from the liquidity pool, according to the guidance. A CGT event will also occur if a DeFi platform pays you rewards in the form of crypto assets.
The move could have a chilling impact on Australians using DeFi even though it is a non-binding tax office guidance representing that tax office's interpretation of the law, meaning it is not the same as a court decision or legislation. It has also garnered criticism from the nation's crypto industry with one lawyer saying this could also apply to transferring tokens to centralized exchanges.
“Being able to wrap tokens is a valuable and necessary cross-chain interoperability tool,” said Michael Bacina, Digital Assets lawyer at Piper Alderman Lawyers. “To have a purely technological function triggering a tax event and tax payable is not something users would expect when using crypto-assets.”
The tax is based on an individual’s marginal rate but the person is eligible for a 50% discount if they hold an asset for 12 months.
Australia’s Board of Taxation is scheduled to give its review on the tax treatment of digital assets, which will include comments on capital gains tax, to the government by Feb. 29, 2024.
Read More: Australia Proposes New Licensing Regime for Crypto Exchanges, Aims for Draft Legislation by 2024
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What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
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CFTC Launches Digital Assets Pilot Allowing Bitcoin, Ether and USDC as Collateral
Acting Chair Caroline Pham has unveiled a first-of-its-kind U.S. program to permit tokenized collateral in derivatives markets, citing "clear guardrails" for firms.
What to know:
- The CFTC has launched a pilot program allowing BTC, ETH and USDC to be used as collateral in U.S. derivatives markets.
- The program is aimed at approved futures commission merchants and includes strict custody, reporting and oversight requirements.
- The agency also issued updated guidance for tokenized assets and withdrew outdated restrictions following the GENIUS Act.
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