What do you think virtual currencies are? Currency, goods, or securities?
Currently, a number of countries and regions around the world have begun discussions and determinations regarding the attributes of virtual currencies.
For example, the (Financial Innovation and Technology Act for the 21st Century) passed in the U.S. in 2024 specifically categorized and regulated virtual assets as 'commodities' or 'securities'; Germany has classified virtual currencies as private money; more countries, such as China and Dubai, have classified virtual assets as property in certain cases.
However, as virtual currencies gradually gain popularity globally, it is also time to 'unify measurements.'
On March 22, 2025, according to Cryptoslate, the International Monetary Fund (IMF) published the seventh edition of the Balance of Payments Manual (BPM7), which qualitatively defined Bitcoin (BTC) and similar virtual currencies for the first time and included them in the balance of payments.
This is the first systematic definition of the status of digital assets in the global financial statistical system by the IMF. Although this classification does not equate to regulatory authorization, its authority is bound to have a profound impact on central banks, finance ministries, tax authorities, and even the crypto industry itself.
However, before discussing the impacts, Lawyer Mankin first talks to everyone about the authority of the IMF organization.
Who is the IMF?
The IMF, or the International Monetary Fund, sounds like a financial organization that is 'far from us,' but it actually carries significant weight in global financial rules.
To date, the IMF has been established for nearly 80 years, with over 190 member countries. Similar to the FATF we introduced earlier, the IMF is not an affiliate of any one country but a 'financial advisor + international data officer + debt firefighting team' built by contributions from various national governments, making it an entity that central banks and finance ministries cannot ignore.
The main responsibilities of the IMF are threefold:
First, monitor global economic risks. If a country's external debt is high, if there are exchange rate issues, or if its finances are about to collapse, the IMF will issue a warning.
Second, provide loans and assistance. If a country's foreign exchange reserves are in crisis, it can apply for relief loans from the IMF.
Third, the most critical point, which is what we are focusing on this time — establishing 'global economic statistical standards.'
You can think of the IMF as the 'chief accountant behind the national financial statements.' The balance of payments, capital accounts, and foreign asset liability statements we commonly hear about all rely on the (Balance of Payments Manual) established by the IMF.
As for individuals, although the IMF does not directly regulate you like the SEC or the tax bureau, the statistical rules it sets will eventually be transmitted step by step to every specific department responsible for 'regulating you.'
How do national statistical bureaus measure your assets?
How do the finance ministry and foreign exchange bureau monitor your funds?
Should the tax bureau and regulatory agencies regulate you and how to collect taxes.
Therefore, the seventh edition of the Balance of Payments Manual (BPM7) has included BTC and similar virtual currencies in the 'statistical category,' which sends a very clear signal to the world: virtual currencies are no longer an asset class that can bypass reports.
Although this signal may not immediately trigger regulatory implementation, it will certainly become a starting point for 'regulatory action, supported by evidence, and capable of measurement.'
Establishment of regulatory standards
Now, let’s return to the latest version (Balance of Payments Manual) regarding virtual assets.
The document states that uncollateralized crypto assets (such as Bitcoin) should be classified as 'non-productive, non-financial capital assets' and listed separately in the 'capital account' of the balance of payments.
Seeing this, if you think that the IMF defining Bitcoin and similar virtual assets as 'non-money' means a relaxation of regulation, then you may be mistaken. In fact, this classification method may be exactly what global regulatory agencies are most pleased with.
Why do I say this?
At the beginning of the article, we mentioned that many countries or regions have long had disagreements on the classification of virtual assets, which has led to frequent occurrences of 'everyone wants to regulate, but no one can regulate' in cross-border and cross-regional regulation. Now, the IMF has directly concluded: Bitcoin and similar assets are neither money nor debt, but a type of capital asset you hold, similar to gold, houses, and artworks.
For regulatory agencies in various countries, this classification is just right. Because it means: this type of asset is no longer a 'gray asset outside the system,' but can instead be incorporated into the national asset-liability statistical system, meaning it can be tracked, reported, and even taxed in the future.
It is also worth noting that BPM7 specifically mentions that stablecoins backed by liabilities, like USDT and USDC, should be classified as 'financial instruments.' This also provides direct reference for countries in the regulation of stablecoins, meaning that regulation can refer to the set of rules for financial products. Additionally, platform tokens like Ethereum (ETH) and Solana (SOL) may be viewed as similar to equity-like instruments during holding, reflecting their investment attributes.
Therefore, from this moment on, there is a handle for regulating virtual assets. Once a handle is established, the three areas most directly affected will be: reporting, taxation, and compliance of fund flows.
The reporting obligation of holders
For a long time, Web3 has been associated with anonymity and decentralization. Even if virtual asset data can be found on-chain, regulatory agencies still do not know who holds these virtual assets.
However, now countries have reason to include uncollateralized crypto assets in the statistics of 'external capital accounts.' This means that as a resident of a certain country, the BTC, ETH, and DAO assets you control or hold, if they involve non-domestic issuance, non-domestic custody, or their issuing governance entities are located abroad, may be included in the 'external assets in the balance of payments,' triggering 'foreign asset reporting' requirements.
This is just the first layer; the more critical second layer is: the domestic tax authorities are also beginning to strengthen the disclosure requirements regarding 'what you hold,' regardless of whether the virtual assets are 'domestic' or 'foreign.'
For example, in the U.S., if you are a tax resident, even if your assets are on a local trading platform like Coinbase, or you control a non-custodial wallet address, once your held assets reach a certain amount, you may still need to report it on Form 8938.
Tax obligations for traders
Whether Bitcoin (BTC) is treated as a non-financial capital asset, or Ethereum (ETH) and Solana (SOL) as equity-like tools, disposals must be processed according to 'asset disposal' and tax obligations must be fulfilled based on realized profits.
Therefore, what virtual asset traders really need to focus on 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, realizing asset appreciation during the holding period, it may be classified as capital gains, even if you only conducted token-to-token trading without converting to stablecoins or fiat currency.
For instance, staking certain tokens, airdrops, and providing liquidity rewards in some countries represented by the U.S. will be counted as taxable income (ordinary income) based on the market value at the time of receipt, regardless of whether you traded or realized profits.
Additionally, if you are a creator or protocol developer who has earned tokens or NFT sales revenue through on-chain transactions, or received protocol fee shares, these may be viewed as operating income or other taxable income, and must be included in individual or corporate income tax taxable income.
Compliance challenges in fund flows
If the accounting of virtual assets has changed the logic of 'what you hold' and 'when you move it, you have to pay taxes,' then the last unavoidable question is: where do these assets come from, and where are they going?
For a long time, the flow of funds on-chain has been in a phase driven by technology, with regulatory lag. After fundraising, project teams directly transfer stablecoins to developers' wallets, distribute salaries, grants, or airdrops through multi-signature addresses, and the USDT transfers and BTC payments between users seem to be 'walking on-chain by themselves,' without banks, reports, or anyone setting up barriers in between.
In the past, these fund circulation events were understood as 'freedom of trade' or 'user experience,' but under the new statistical criteria, they have turned into 'capital account changes' or 'financial account receipts and payments,' and even in some countries, triggered applicable thresholds for foreign exchange and payment compliance. Regulatory bodies can then use existing policy tools to cover these.
For Web3 project teams, if the technology team is based domestically, but the funds are directly transferred from foreign wallets to the team wallet, this structure, once viewed by regulators as 'capital inflow' or 'capital return,' may require explanations of the nature of the funds, compliance with reporting obligations, and even face penalties for fund freezes or foreign exchange violations.
For individual investors, using non-custodial wallets to receive stablecoin transfers and then cashing out, exchanging, or flowing into fiat accounts may get stuck in the trading platform's risk control system due to unclear source paths or complex counterpart identities, or be required to supplement KYC and explain the source of funds.
Summary by Lawyer Mankin
It should be emphasized that BPM7 is not a regulatory rule; it will not directly determine how much tax you have to pay, whether your money can be remitted out, nor will it immediately lead to KYC, audits, or asset freezes. However, it quietly transforms virtual assets from 'unclear' to 'classifiable' at the underlying level of regulatory logic.
For regulators, this is a technical breakthrough: moving from 'lack of regulatory basis' to 'can be incorporated into the system.' For the industry, this is a signal: Web3 assets are slowly entering the statistical scope, policy models, and even the enforcement perspective of the mainstream financial system.
Although the changes brought about by this will not immediately impact every user, for those who:
Projects that still use the traditional structure of 'receiving abroad, spending domestically'
Users completing cross-border transactions using stablecoins
High-net-worth individuals holding a large amount of on-chain assets
It is worthwhile to conduct structural sorting and compliance preparation as soon as possible. Especially in the face of increasingly stringent trends regarding on-chain identity verification, on-chain tax interfaces, cross-border transaction checks, and other systems, the cost of proactively adapting is much smaller than that of passive responses.
We understand that every Web3 practitioner and user is more accustomed to the narrative of 'decentralization' and 'free circulation.' However, as this BPM7 shows, global regulation is not denying virtual assets but is finding a way to express them that can be 'incorporated into rules.'
Since the scoring method of this game has begun to change, at the very least, we need to learn how to read the scoreboard.
/ END.