Crypto Taxation

[superman2019]

More countries are starting to introduce crypto taxes. This does not seem logical to me, because not having fully adapted the norms for using blockchain and crypto in the state, they already want to receive part of our income. But if crypto is not cash, then why not make exchanges simply withdraw VAT? If crypto is just a product, then the store usually takes it into account, and not the buyer runs around with a declaration and does not write how much he spent on purchases.

If you withdraw the income from the sale of crypto this is already an investment, therefore, a capital gains tax is paid, not just VAT. I am sure that for the exchanges will prescribe the rules of operation. Which will likely lead to an increase in the amount of the commission.

The legislative framework for cryptocurrencies has been adopted in a small number of countries, and so far the sphere is uncontrolled, not to mention that very few have heard about cryptocurrencies at all and I understand why all this is necessary. It’s definitely not a thought to pay taxes to anyone until there is a clear explanation that he wants us

[Abiky]

Currently, governments can only tax cryptocurrency exchanges and users in those trading networks. Apart from the exchanges they manage, there's no other way to collect taxes. If they want to collect taxes on Crypto users, they need more specific and complete rules

Exactly. As long you keep trading crypto on centralized exchanges, you'll be subject to paying taxes on your crypto funds. There's virtually no way governments will be able to enforce crypto taxation on decentralized exchanges and P2P marketplaces. The situation becomes even worse with atomic swaps as the exchange from one coin to another happens between chains without the need for a middleman whatsoever. Once governments see they're unable to tax crypto in their entirety, they'll most probably ban the whole ecosystem as we know it. If this becomes a reality, then people won't be able to use cryptocurrencies as they normally would, greatly diminishing the value of the entire crypto market. One way or another, crypto needs the governments' approval to succeed within the mainstream world.

The other choice governments have to make people pay their crypto taxes, is to implement strict regulations to the entire Blockchain industry. Perhaps, they won't allow developers to continue working on decentralized solutions such as non-custodial mixers, decentralized exchanges, other privacy tech, and even P2P trading software. If they manage to do this, then crypto will be entirely subject to centralized exchanges as it'll be the only way people will get access to them. We'll see how everything unfolds within the future as governments start rolling in their own digital currencies for the world. As governments want to maintain supremacy, they don't want alternative payment systems taking over the existent financial infrastructure. They have already rejected Facebook's Libra stablecoin, and they can do so with crypto until Fiat is the only form of payment used within the mainstream world (as it was before crypto's inception back in 2009). Let's hope that everything turns out great in the end for the growth of the crypto industry in general. Just my opinion

[pixie85]

We do not want but we will be obliged to pay taxes. The state exists at the expense of taxes, although it’s not always clear to me why then not introducing mining at a legal level and building farms on environmental electricity. This would solve the issue of generating additional electricity and at the same time spend a small share to receive an inflow of funds into the country.

There's always time to change things. If enough people rebelled against taxation in their country the government would have to change policies. The government is strong only because it has support of the majority and people are scared to do something. They will write in the Internet how taxation is unfair but never really protest because it takes more effort to do so.

[Webetcoins]

Every Government is running with the money from the people, So Government is ready to serve their people because of the taxation. I think cryptocurrency would get enlisted to the government if this system is included in the taxation system. when the government will get benefitted by this system then obviously the government would allow this platform within their territory, we know that tax is being used for the welfare of the people, it's very certain that they will find the proper way to minimize this issue and cryptocurrency will get accepted and legalized around the world very soon.

Indeed. If we don't want to pay tax by using cryptocurrency, then don't expect that cryptocurrency will be adopted by different countries. It doesn't mean that they're asking for tax, they're already taking advantage of us. Tax is part of us. They use money to run the country using the tax paid by the citizens. There are government officials that are corrupt but the main purpose of tax is for the country itself.

You have a point but actually our government are all wiser than we think, for sure they will not let this to happen and will do something that will make us panic and will disclose our earnings in crypto so that we can pay tax, so for now, they might not that too strict so we can enjoy it first, but here in our country little by little they are making tax regulations on it.

Governments simply develop national funds from the money they collect from locals in the form of taxes. No government official is using money from his or her salary or personal savings. Whatever facilities they give to public are from the money of public even their salaries as well. Definitely governments will try rather are trying to figure out a method of charging taxes from crypto holders.

[Abiky]

There's always time to change things. If enough people rebelled against taxation in their country the government would have to change policies. The government is strong only because it has support of the majority and people are scared to do something. They will write in the Internet how taxation is unfair but never really protest because it takes more effort to do so.

Sadly, that's the hard truth we're facing nowadays. Many people complaint over the web, but they don't take efforts on protesting against an unfair rule/law imposed by a government. As long as people allow crypto to be taxed, governments will continue with the endeavor. It's so much easier to tax crypto today than it was since crypto's inception back in 2009. This is mostly because centralized exchanges dominate the space. Most (if not all) of these exchanges are required to comply with KYC/AML laws allowing governments to easily track & trace a person's funds for taxation. With decentralized exchanges, this is no longer possible. The situation is even worse for governments when a person uses mixers/tumblers or even privacy-oriented cryptocurrencies like Monero and Grin. This way, it'll be hard (if not impossible) to tax every person using crypto within the mainstream world.

Whenever governments will be successful at taxing crypto funds or not, it's yet to be seen. The Blockchain industry is still not mature after 10 years since its inception. There are a lot of flaws to be discovered, and issues to be solved in order to help fulfil Satoshi's vision of decentralized finance. If governments find out that their actions were in vain, then it's likely that they'll crackdown on the entire Blockchain industry as we know it. Time will tell us the fate of Crypto Taxation as crypto and Blockchain tech grows into a "force to be reckoned with". Just my opinion

[aardvark15]

I agree that the way a government taxes cryptocurrency can affect how it is used. The US requires capital gains taxes on transactions which will prevent cryptocurrency from being used as a regular payment method at least for small purchases.

[Trela]

Sometimes I wonder why governments want to tax our cryptocurrency funds if they're not considered as money by most people worldwide?

Because they still haven't figured out how to control it entirely, accepting a new monetary concept while they haven't figured out the best way to control it is so risky. At least, they have made the right moves to accept it as a high-risk digital asset, although that's not so common.

I also had to think a lot about this issue. The nature of crypto is not wrong, but because its privacy is so good, it makes the government have to think and worry a lot about the future of cryptocurrency.

[youdacapt]

the government can only track taxes from centralized exchanges and system that makes users must comply, can only target those involved in jurisdiction. They cannot intervene further towards coins which remain active in privacy outside the exchange, unless they have many criminal cases to use as evidence. There is still a lot of decentralization that will run normally, the government's goal can only be to reduce the expansion of activities outside of tax control simultaneously.

[Meowth05]

I agree that the way a government taxes cryptocurrency can affect how it is used. The US requires capital gains taxes on transactions which will prevent cryptocurrency from being used as a regular payment method at least for small purchases.

People are really not willing to pay taxes for the transactions they make with crypto currencies. There are high taxes that people pay when they make transactions with fiat and crypto currencies are the ones which have provided people great alternative. If government is going to make bitcoin legal, definitely they will do this after designing a method of charging taxes through this currency and that will affect its usage.

Indeed. I think no one person would like to have a tax upon having transaction in cryptocurrencies, people are preferably earn through crypto market simply because it is away on taxation as a matter of fact even transactional fees is a big deal in crypto community. I think it will be tough for government to impose a tax in this kind of system due to the fact that this cryptocurrencies are decentralize and cannot be fully manipulate by anyone.

[monineklutak]

I agree that the way a government taxes cryptocurrency can affect how it is used. The US requires capital gains taxes on transactions which will prevent cryptocurrency from being used as a regular payment method at least for small purchases.

It is natural if America gives its tax to crypto currency holders, but it is unfortunate that they provide taxes because of their use as a medium of exchange, this is unfair in my opinion

[luppecuppe]

It won't be that easy to get tax from Bitcoin or the like. Because people will probably never get back to paper money. Cryptocurrency will dominate the trade. I think the fear of states should be in this direction. Instead of returning everything with tax. I propose a spontaneous order.

[makishart]

the government can only track taxes from centralized exchanges and system that makes users must comply, can only target those involved in jurisdiction. They cannot intervene further towards coins which remain active in privacy outside the exchange, unless they have many criminal cases to use as evidence. There is still a lot of decentralization that will run normally, the government's goal can only be to reduce the expansion of activities outside of tax control simultaneously.

Not really, the government once figures out our address where we save up our crypto in the past or present that could pretty much track where it's going considering that most of popular address provided by exchange haveg some kind of name label, if the government want to put additional effort they could leak everything out of it.

[CyberKuro]

the government can only track taxes from centralized exchanges and system that makes users must comply, can only target those involved in jurisdiction. They cannot intervene further towards coins which remain active in privacy outside the exchange, unless they have many criminal cases to use as evidence. There is still a lot of decentralization that will run normally, the government's goal can only be to reduce the expansion of activities outside of tax control simultaneously.

Not really, the government once figures out our address where we save up our crypto in the past or present that could pretty much track where it's going considering that most of popular address provided by exchange haveg some kind of name label, if the government want to put additional effort they could leak everything out of it.

How exactly the government be able to track down our addresses if we never signup to an exchange which linked to our privacy id and bank account? If I just use a wallet not provide by exchanges, how they get to know who own the address? @youdacapt was right, I agree with his opinion, if you don't want to recognized by the authorities that ever use bitcoin, just stay away from exchanges, keep your bitcoin in private wallet such as bitcoin core, electrum, etc.

[Brunus]

There are a lot of discussions about bitcoin taxation. In fact, it's a false problem: at some point, bitcoins are like points in a video game.
The fact that they have a "value" is irrelevant, at least until you try to convert it to fiat.
But even then, there are several systems of "solving the problem" ...

[bitbunnny]

I think that Bitcoin has bigger problems than taxation. Lack of positive regulation and integration into financial and economy system are some of them.
As far as I know majority of countries don't tax Bitcoin or other cryptocurrencies itself, only the transactions to fiat and that isn't present in all countries, only some. So I don't think that some very big number of Bitcoin users is affected by that and I don't see Bitcoin taxation or better to say taxation of Bitcoin exchange transaction as some huge problem.

[kotik085]

In my country, no, Bitcoin was taxed. There is one that pays the tax who has the mining farm, and he rents a room.

[pragna]

How could taxation can be issued where there is no wide rules and regulation by Government about crypto. On the other hand in flat money government can trace money so that we are bound to give tax in our income but here government can not trace our transaction and income-expenditure.

For kyc i think it does not work truly. In transaction many country people involved where maximum government does not know about crytpo and maximum time people give wrong information which can not be trace by KYC require team. So i think KYC is nothing and it only works in bounty.

[Webetcoins]

In my country, no, Bitcoin was taxed. There is one that pays the tax who has the mining farm, and he rents a room.

When you rent a room, definitely you are in paper works and you have to pay for the place. That has nothing to do with bitcoin taxation. But if the person is being taxed because he or she is owning a mining farm, then this could be in one way called taxation of bitcoin. I am curious that just mining has been taxed or transactions as well. Government shall not put taxes on mining because it is already very hard on the pocket of a miner.

[Scotslass]

In my country, no, Bitcoin was taxed. There is one that pays the tax who has the mining farm, and he rents a room.

When you rent a room, definitely you are in paper works and you have to pay for the place. That has nothing to do with bitcoin taxation. But if the person is being taxed because he or she is owning a mining farm, then this could be in one way called taxation of bitcoin. I am curious that just mining has been taxed or transactions as well. Government shall not put taxes on mining because it is already very hard on the pocket of a miner.

If government is heavily taxing mining and transactions then this is not right.
In my opinion they should tax transactions, but let miners do their job.
Other way taxation of miners will scare them off and it will lead to Currency's price getting higher.

[Abiky]

Because they still haven't figured out how to control it entirely, accepting a new monetary concept while they haven't figured out the best way to control it is so risky. At least, they have made the right moves to accept it as a high-risk digital asset, although that's not so common.

I also had to think a lot about this issue. The nature of crypto is not wrong, but because its privacy is so good, it makes the government have to think and worry a lot about the future of cryptocurrency.

I think that governments are "testing the waters" with their implementation of taxes within the crypto/Blockchain industry. They know how volatile prices are, but are doing their best effort to tax crypto from people in the mainstream world. If successful, you could expect crypto to get the approval of governments all around the world. Otherwise, there will be a full crackdown on crypto and Blockchain technology as we know it. I believe the main reason why Bitcoin and most other cryptocurrencies have survived is because of their transparency. Cryptocurrencies which rely on privacy solutions by default (like Monero, Grin, Bean, and so on..) may not last for long as governments will disallow people from using them. Once they're banned, most people would not want to transact with these cryptocurrencies. Only a small portion (mostly crypto enthusiasts) will continue to use privacy coins despite being banned by worldwide governments. After all, these digital assets are nearly impossible to track making them impractical for taxation.

As long as centralized exchanges exist, governments will be able to effectively tax crypto from their citizens. It's no secret that most (if not all) centralized exchanges require their customers to provide ID verification. This, alongside the record of trades performed on the exchange, can be used by governments in order to enforce crypto taxation among its citizens. However, decentralized exchanges makes the government's life harder as it's nearly impossible to track people in order to perform crypto taxation. This, combined with privacy coins, would leave governments out of the equation (which is something they're afraid of).

Nonetheless, time will tell us what will be the outcome of crypto taxation within the mainstream world. I'm sure that worldwide governments will give up doing this, since it's nearly impossible to tax every single person using crypto and Blockchain technology. With decentralized solutions such as decentralized exchanges and privacy coins, people will be able to achieve financial freedom without the need to worry about government intervention. Just my thoughts