Following a major announcement overseas, the Australian Government has confirmed crypto currencies will continue to be excluded from foreign currency tax arrangements.

The decision follows a move by El Salvador after allowing Bitcoin as legal tender.

Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones said the decision has the potential to create uncertainty about the Bitcoin status and other crypto assets for tax purposes in Australia.

As a result of the government’s move to legalize the current tax arrangements, crypto assets will not be considered as foreign currency for tax purposes in Australia.

Crypto assets held as investments will continue to be subject to capital gains tax.

“This gives certainty and clarity at a time of volatility for crypto currencies,” Mr Chalmers and Mr Jones said.

“The government will continue to take a pragmatic and timely approach to its role in the rapidly evolving digital currency landscape.”

It has been a few months of nightmare for cryptocurrency investors, with billions being wiped off the markets. There are warnings that it’s about to get a whole lot worse.

A senior executive at one of the world’s largest banks admits this week that the crypto winter has now turned into a “polar vortex”.

However, investors panicked following the US central bank hiking the interest rate by 75 basis points during last weekend.

Fears of a global recession followed and crypto investors retreated, causing a mass sell off and a drastic drop in price for some of the world’s top-ranked blockchains.

Bitcoin plunged its lowest level since December 13, 2020 on Saturday to below $20,000.

Stock markets around the globe have plunged this week amid fears that inflation-fighting interest rate hikes by the US Federal Reserve and other central banks could trigger a recession.

Cryptocurrencies with no questions have paid the biggest price.

The suspension of withdrawals by two cryptocurrency platforms have accelerated Bitcoin’s fall.

The Celsius Network said it was pausing “all withdrawals, swap, and transfers between accounts” due to “extreme market conditions.” Babel Finance said it was facing “unusual liquidity pressures.” Major exchange Binance temporarily suspended bitcoin withdrawals and advised customers to use other networks instead.

“We appear to be entering a recession after a 10+ year economic boom,” Coinbase founder and CEO Brian Armstrong said.

The crypto sector benefited from a vast infusion of cash due to easy money policies from the world’s biggest central banks in the last few years.

However, helping to send the industry crashing is the rampant inflation that has sparked tighter monetary policy across the globe.

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