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Edited version of private advice
Authorisation Number: 1052360108330
Date of advice: 12 February 2025
Ruling
Subject: CGT - cryptocurrency
Question
Does the transfer of your cryptocurrency to a self-custodial smart contract for the purpose of validator staking trigger a CGT event A1 under section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer 1
No. As there is no change in the beneficial owner the transfer will not trigger a CGT event.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You own cryptocurrency, currently held in cold wallets, which are not generating any rewards. That is, it is currently held in accounts in the cryptocurrency blockchain for which the keys are known and controlled by you.
You intend to transfer your cryptocurrency to a self-custodial smart contract to do validator staking for rewards where you provide an entire node and you retain full control of your cryptocurrency at all times.
You need to have at least 32 cryptocurrency to create a validator node.
Your cryptocurrency will be transferred to a cryptocurrency staking deposit contract address, where only you will be able to withdraw the cryptocurrency from the address.
The contract will be permanently coded into the blockchain and cannot be changed; therefore no third parties are able to alter the contract.
If third parties running the 'platforms' for self-custodial validator staking cease to exist, you can still recover your cryptocurrency from the smart contract. You are in control of your cryptocurrency the entire time.
You provided us with details on the combination of methods that you intend to use for validator staking.
All of these methods are self-custodial, therefore only you would have access to move the cryptocurrency in and out of the validator staking state.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10