A few years back, when the cryptocurrency was still traded on a small scale, many traders entered the market, because it promised them one thing: anonymity!
Down the line, like-minded traders with similar intent tried to enter the crypto world because it wasn’t regulated by any financial institution. Since the currency was a digital asset and not legally traded, the profit earned from trading was not taxable. Slowly, the whole world knew that this digital currency is taking the world by storm and eventually alarmed the government agencies and financial institutions across the world.
Ironically, the US government has still hasn’t recognized the value of the coin and still considers it not to be a legal tender. But, that doesn’t mean the government will overlook the tremendous profits that the citizens are receiving from their trades.In the last quarter, Congress passed a bill that was essentially a tax reform bill which mentioned that from now on all the cryptocurrency tradings will now be considered as taxable events, and no exemptions whatsoever will be entertained.
If our legal tenders are taxed the way cryptocurrency is taxed, then we will end up paying tax for every event like buying milk, hailing a cab, riding a public transport, we will pay tax for every event. The government doesn’t prove its viability by taxing crypto for every damn thing here’s why:
When the regulatory body and the so-called authority aren’t taking the pain to mint the coins, they shouldn’t be taxing the innocent traders for everything. Cryptocurrency cannot be compared to gambling, since it uses advanced technology, intellect to enable the successful trading going on.
Not all traders can be traced and neither their investments be analyzed – believe it or not, there are tech-savvy traders who have opened accounts with overseas exchanges and safely secured their coins to avoid any tax raids, it is technically impossible to trace crypto data because the details are highly secured in the servers, and no two traders while trading know the other’s identity, the transactions are anonymous too!
Failed trades shouldn’t be coming under tax purview either – we all have some point of time taken wrong decisions, even the crypto traders have been victims of failed ICOs and members of exchanges had their money hacked at times. When the government can’t help them retrieve their valuable money, is it really fair to charge GST on such transactions in India?
And, how difficult it is to file a tax return in crypto? Well, the answer is complex, very complex! Till date, it is still hard to understand the crypto market, on the top of it, recording and then filing a tax return on every transaction in the crypto world may create an unnecessary havoc in your life, which isn’t fair enough.
No doubt taxation is very important, but the already existing taxation policies don’t work for the advanced framework that is utilized by the cryptomarket. New rules have to be designed by the regulatory bodies, and only the person who has a sound knowledge of how the crypto market operates can create a sensible tax framework for the traders such that every one is able to appreciate the efforts put in by the system.
With so many setbacks taking place in the crypto world currently, do you think cryptocurrency should be taxed by applying the existing tax rules in the system? Are you in favor of the taxation? Let us know your thoughts in the comments section!