Crypto Taxation

[Sanugarid]

Goverments are always in search for money, specially free money so they use every opportunity to get to them and cryptocurrency makes no exception. It is sad the fact that even păaing taxes for crypto it is somehow considered iligal.

That's true, but it is not very easy to tax cryptocurrency. It is not a physical asset and exists only in digital form. So it is very easy for the users either to hide or manipulate the tax burden. Also, the decentralized nature of the cryptocurrency makes it vary hard to track down the users and identify them. And finally, a large part of the transactions take place outside the regulated exchanges, especially in peer-to-peer platforms.

Absolutely right, we all know that cryptocurrency is decentralized which means there are no groups of people or any organizations that are running cryptocurrency. We can actually say that it is really hard to put some taxes in cryptocurrency itself since every transaction online is free and easy. Yes, they can ban cryptocurrency doing some firewalls in their country to prevent people of the particular place to access cryptocurrency but there are lots of ways they can do to still access it.

Government doesn't want any one who will be able to transfer fund to prevent money laundering that is why they create a centralized exchange and make profit because of it. It is more like a tax that you have to pay even if it's a cryptocurrency which we all know there is no tax that we have to pay unless there is government behind it.

Maybe they can give some taxes only to those people who actually turn their crypto into fiat by converting it and then withdrawing it on local banks but the tax is on a transaction have done with the bank. That is the only thing we can say that crypto can be taxed. The fees on exchanges don't have to do with the government rules.

[pixie85]

Government doesn't want any one who will be able to transfer fund to prevent money laundering that is why they create a centralized exchange and make profit because of it. It is more like a tax that you have to pay even if it's a cryptocurrency which we all know there is no tax that we have to pay unless there is government behind it.

You got confused there, friend. Government wants to prevent money laundering and that second part is meaningless. You wanted to write something but didn't know what so you clumped together a few words and thought that maybe you'll get lucky and nobody will read it.

The only thing that will look worse is having a high taxation fee than the transaction fee

Crypto transactions won't be taxed just as fiat transactions aren't. You have to pay tax from profit - no profit means no tax.

[googol.star]

Sometimes I feel that the government is the biggest winner in this whole crypto thing. It's a zero sum game, but they collect the taxes.

[Google+]

Government doesn't want any one who will be able to transfer fund to prevent money laundering that is why they create a centralized exchange and make profit because of it. It is more like a tax that you have to pay even if it's a cryptocurrency which we all know there is no tax that we have to pay unless there is government behind it.

well it should be like that the government will never be able to control bitcoin so the government will not be able to do the tax costs for all bitcoin transactions because when making transactions using bitcoin you have made tax payments to be used as shipping costs.

[thesmallgod]

I agree with you. Especially in some countries where money generated from tax has become the major source of money for infrastructural development and welfare even though the government might see crypto as true tender. They know how much and that many people are holding a large amount of crypto-asset which could have to fetch them a lot of money as tax in cash. I wouldn't be bordered if I see in the nearest future that the government has deciphered a mean of taxing people hodling cryptocurrency. Value-added tax through local exchanger might be one of the numerous way.

[whyrqa]

I agree with you. Especially in some countries where money generated from tax has become the major source of money for infrastructural development and welfare even though the government might see crypto as true tender. They know how much and that many people are holding a large amount of crypto-asset which could have to fetch them a lot of money as tax in cash. I wouldn't be bordered if I see in the nearest future that the government has deciphered a mean of taxing people hodling cryptocurrency. Value-added tax through local exchanger might be one of the numerous way.

Despite the fact that in my country, Ukraine, cryptocurrency is considered legalized, and the government decided not to tax users.  Of course, this question needs to be thoroughly studied to talk about the taxation of cryptocurrency users in my country, because it deals with certain volumes of cryptocurrency transactions.  Nevertheless, we must understand that almost all social guarantees, as well as services that work for the benefit of their people, are all paid for by taxpayers.  Of course, I understand that the government uses a lot of money at its discretion without the participation of its citizens, but nevertheless I believe that most of the tax reaches its goal.

[Abiky]

That's true, but it is not very easy to tax cryptocurrency. It is not a physical asset and exists only in digital form. So it is very easy for the users either to hide or manipulate the tax burden. Also, the decentralized nature of the cryptocurrency makes it vary hard to track down the users and identify them. And finally, a large part of the transactions take place outside the regulated exchanges, especially in peer-to-peer platforms.

Technically, it's not easy to tax cryptocurrency. But with the rise of centralized exchanges, it's becoming a "piece of cake" for governments to tax crypto from their citizens via the use of personally identifiable information. If crypto continues to become dependent on centralized exchanges to survive, then its value proposition (which is freedom of money and censorship-resistance) will be ruined. Luckily, we have DEXs, non-custodial mixers, and even privacy-oriented coins to "tackle" this. But the problem is that governments will not allow these decentralized alternatives to continue their development within the mainstream world. They'll quickly classify these "tools" as illegal claiming that they can be used for money laundering and tax evasion. The truth is that criminals use Fiat more for these purposes than crypto as physical Fiat is stable in price and it's much harder to track. Still though, governments don't see it this way which leads them to have a reluctant stance against crypto and Blockchain tech in general.

As long as centralized services within the crypto/Blockchain industry exist, taxation will be the norm of worldwide governments for a long time. Now, imagine if crypto relied on decentralized alternatives instead of centralized ones. If the entire ecosystem was completely decentralized, you could've expected a massive crackdown by governments into crypto by now. The mere fact that most (if not all) cryptos are heavily traded on centralized exchanges, allows governments to tax crypto with ease. There's nothing we can do (for now) but to comply with our crypto taxes to avoid facing fail time. Just my thoughts

[sisule]

KYC in itself isn't always absolutely a horrific idea. It does save you some fraud and adds some other layer of security but nevertheless relies upon if the alternate is trustworthy enough. KYC should assist retrieve coins despatched to wrong cope with, on exchanges that implements KYC too could use these details to fix some problems. but, despite the fact that tax isn't always also a terrible aspect (for the reason that it's miles essential to have regulation enforcement and peace and order), I do also disagree on government's warm eyes on cryptocurrencies, in particular now that they'd seen its capability, it simply looks as if they just need to take advantage of these grounds.

[STT]

Sometimes I feel that the government is the biggest winner in this whole crypto thing. It's a zero sum game, but they collect the taxes.

That is about spot on, the transfer of cash being taxable is highly profitable and not true anywhere else.    So its basically nonsense to do so and down to confusion mostly now I think.   Even with equity shares in a company the government only very lightly taxes the idea of buying and overall only a tax for a profit in a years worth of transactions with a great allowance, to be any more harsh then that for crypto is a bit silly.   Most crypto is purely just send a secure transaction one place to another, there is no ownership or equity to tax only the idea of holding value.
   Some of the famous candidates for USA president this year have the idea of taxing capital not profit just the idea of having a certain value is taxable and in the EU I think Cyprus confiscated amounts of cash from people over a certain level.   Lots of people are fine with this as its aimed at rich people but the end game is all people become liable to lose what they own.    WHen inflation gets out of control it is basically a tax on capital, thats why all these things and crypto is associated.

[FlightyPouch]

Government doesn't want any one who will be able to transfer fund to prevent money laundering that is why they create a centralized exchange and make profit because of it. It is more like a tax that you have to pay even if it's a cryptocurrency which we all know there is no tax that we have to pay unless there is government behind it.

well it should be like that the government will never be able to control bitcoin so the government will not be able to do the tax costs for all bitcoin transactions because when making transactions using bitcoin you have made tax payments to be used as shipping costs.

But bitcoin may be  mainstream payment method in the past. We don't know but if that happens, the government will be regulating it with a new rule. Maybe it would first go in an exchange so that they can tax it, maybe they can use the exchange itself to tax it or they can create their own exchange and that is where our payment will be going.

[Text]

I agree with you. Especially in some countries where money generated from tax has become the major source of money for infrastructural development and welfare even though the government might see crypto as true tender. They know how much and that many people are holding a large amount of crypto-asset which could have to fetch them a lot of money as tax in cash. I wouldn't be bordered if I see in the nearest future that the government has deciphered a mean of taxing people hodling cryptocurrency. Value-added tax through local exchanger might be one of the numerous way.

If the government tax the cryptocurrency then they should adopt and use blockchain technology too so there will be no more corruption. All the money they spent will be posted on the public ledger, we know where the money is going and how they use it for the betterment of the country's industries and economy.

[rodskee]

I agree with you. Especially in some countries where money generated from tax has become the major source of money for infrastructural development and welfare even though the government might see crypto as true tender. They know how much and that many people are holding a large amount of crypto-asset which could have to fetch them a lot of money as tax in cash. I wouldn't be bordered if I see in the nearest future that the government has deciphered a mean of taxing people hodling cryptocurrency. Value-added tax through local exchanger might be one of the numerous way.

If the government tax the cryptocurrency then they should adopt and use blockchain technology too so there will be no more corruption. All the money they spent will be posted on the public ledger, we know where the money is going and how they use it for the betterment of the country's industries and economy.

but that is one reason why Governments are preventing Crypto or Blockchain enters their system ,but they just want to put taxes for income and that is unfair.
they are preventing to cut the corruption because BlockChain will surely take their 'Under the Table'system and this is not what they wanted to happen.
though i fully support the government putting taxation because this will help the economy of my country but i also wanted assurance that the taxes will be spare rightfully.

[Subbir]

in the early stage, bitcoin was created to give us privacy or anonymity but it doesn't work like that anymore because of government intervention.

If that would be the case, the main purpose of bitcoin would be dissolve: its decentralization and anonymity. We can't really say that it is what is happening, maybe it is on the manner of use of bitcoin transactions. It is on how the two party decided on how to transact using bitcoin, might it be for buy and sell, or as a payment in the workplace that are a subject for government laws and regulations.

Does taxation have something to do with privacy anyway?
I mean there are some ways to tax crypto market without getting private data of each user and their transactions

I think there's no taxing within the crypto market because it's not regulated by any government and isn't enforceable in government law. you're right that the majority of countries are protecting the privacy of Bitcoin However there are not any rules for doing crypto albeit there's no personal data for the transaction it's normal for transaction fees to be deducted.

[Dhoe]

If the government tax the cryptocurrency then they should adopt and use blockchain technology too so there will be no more corruption. All the money they spent will be posted on the public ledger, we know where the money is going and how they use it for the betterment of the country's industries and economy.

Yes that's right, if the government taxs the Cryptocurrency it means they have recognized Crypto as a legal thing. And I think that is a very good development for the world of Crypto because it will be easier for us to use Cryptocurrency if the government legalizes it.

[Abiky]

I think there's no taxing within the crypto market because it's not regulated by any government and isn't enforceable in government law. you're right that the majority of countries are protecting the privacy of Bitcoin However there are not any rules for doing crypto albeit there's no personal data for the transaction it's normal for transaction fees to be deducted.

Governments are unable to tax crypto directly, but with the advent of centralized exchanges, anything is possible these days. After all, most (if not all) centralized exchanges are require users to verify their IDs. This would make government's life easier by keeping track of an specific person's crypto trades for taxation purposes. The real deal would be enforcing crypto taxation within decentralized exchanges and non-custodial mixers as they lack a central operator or middleman. The very nature of decentralization makes it virtually impossible to tax a person's cryptocurrency wallet. As long as Bitcoin and most other cryptocurrencies have transparent Blockchain ledgers, governments will be able to continue with the endeavor.

On the other hand, privacy coins like Monero and Grin are much harder to trace from the general public. There's the feeling that one day governments will ban these cryptocurrencies from mainstream use because of this. Only Bitcoin and other cryptocurrencies with a transparent blockchain ledger will be able to survive for a very long time. People who're caught using privacy coins will be tagged as money launderers and tax evaders. The way crypto is heading towards extreme regulation is not as good as we thought it would be.

Nonetheless, most people will decide to comply with their crypto taxes in order to maintain the legitimacy of the crypto/Blockchain space (aside from avoiding jail time). As long as governments are able to successfully collect crypto taxes from their citizens, they'll give the "green light" for the growth of the Blockchain industry within the mainstream world. Like it or not, it's the way crypto will be heading for a very long time. Hopefully, regulators and crypto companies/businesses could work together in order to make crypto land a better place. Just my opinion

[awik p]

If the government tax the cryptocurrency then they should adopt and use blockchain technology too so there will be no more corruption. All the money they spent will be posted on the public ledger, we know where the money is going and how they use it for the betterment of the country's industries and economy.

Yes that's right, if the government taxs the Cryptocurrency it means they have recognized Crypto as a legal thing. And I think that is a very good development for the world of Crypto because it will be easier for us to use Cryptocurrency if the government legalizes it.

although it has not yet legalized it, the government can also collect taxes, albeit indirectly. for example, in a local exchange, where the company is legal with applicable state law, of course, each activity contains an element of tax collection from the government. this also happened in my country. but even so I hope crypto will be legalized in my country soon

[Gheka]

If the government tax the cryptocurrency then they should adopt and use blockchain technology too so there will be no more corruption. All the money they spent will be posted on the public ledger, we know where the money is going and how they use it for the betterment of the country's industries and economy.

Yes that's right, if the government taxs the Cryptocurrency it means they have recognized Crypto as a legal thing. And I think that is a very good development for the world of Crypto because it will be easier for us to use Cryptocurrency if the government legalizes it.

although it has not yet legalized it, the government can also collect taxes, albeit indirectly. for example, in a local exchange, where the company is legal with applicable state law, of course, each activity contains an element of tax collection from the government. this also happened in my country. but even so I hope crypto will be legalized in my country soon

I believe that only a handful of people like you would like a global legalization, for a lot of users and exchanges, life like today is probably going well when the government doesn't legalize, small controls can only be concentrated in some countries, create many advantages for investors to activate pumps, create virtual prices and make money in the market. Exchanges also do not need to pay all taxes to the government or if required, they only need to pay taxes in the markets of some countries that are required, profits are enhanced when they are not required to allocate their benefits to the tax

[johnyj]

I think today, most of governments income comes from newly printed money, it is magnitudes larger than their tax income, so it is very strange they still want to make lots of paper work and collect those miserable amount of tax income

[wowz2010]

I think today, most of governments income comes from newly printed money, it is magnitudes larger than their tax income, so it is very strange they still want to make lots of paper work and collect those miserable amount of tax income

It is true tho. It works almost same as "obesed" companies like pizza hut who suffers from its own amount of workers.
So govs could suffer from operating its own taxes

[Abiky]

I think today, most of governments income comes from newly printed money, it is magnitudes larger than their tax income, so it is very strange they still want to make lots of paper work and collect those miserable amount of tax income

That's certainly true, mate. But governments (and central banks) are greedy and they want to take advantage of a revolutionary tech such as crypto and Blockchain for their own benefit. As long as they're able to tax crypto out of people's "pockets", the industry will see the "green light" for its growth within the mainstream world.

Now, imagine if Bitcoin and other cryptocurrencies across the market were completely untraceable. It would be nearly impossible for governments to be able to tax crypto effectively from everyday people. Still though, the mere fact that every single cryptocurrency is being traded on centralized exchanges has a lot to say over government's prominence within the Blockchain industry. After all, it is these same centralized exchanges which makes governments' life easier by enforcing ID verification to their customers. This allows governments to tax crypto even if privacy coins are used for trading on an exchange. With decentralized solutions, taxing crypto would be a thing of the past. The main issue is that decentralized exchanges have lesser liquidity than centralized ones. Using both a non-custodial mixer and a decentralized exchange would allow a person to remain "under the radar" for a very long time.

Nonetheless, it's our obligation to pay taxes in order to avoid facing jail time. I know this goes against crypto's value proposition of "eliminating the middleman", but this is the path crypto has taken lately. The way I see it, crypto is heading more towards centralization and manipulation than I've ever imagined. As long as big players like Binance and Bitmain dominate the industry, there's the risk of centralization which gives governments an advantage over one's crypto funds. That's why people need to use decentralized services more thoroughly in order to prevent crypto from being manipulated (sort of) at will. Until then, crypto will be forced to follow government regulations or its growth will be stifled within the mainstream world. Just my opinion