Because Bitcoin has only been around since 2009, it still constitutes a murky area for many taxpayers. We asked the experts to set us straight on tax requirements for Bitcoin. Read on to learn more.
Kieran Smith, Cryptocurrency analyst at Bitcopy Company.
Very few jurisdictions don’t tax cryptocurrency, so most big cryptocurrency winners will find themselves owing tax of some form. But given the libertarian appeal of the technology, cryptocurrency owners may find themselves averse to paying taxes. Hence we have seen a large amount of “mysterious boating accidents” in which the private keys controlling cryptocurrency are tossed overboard in a moment of carelessness, never to be found again.
These “boating accidents” which proliferated on Twitter after privacy coin Monero developer Riccardo Spagni kickstarted the trend, are more than just an apt metaphor.
They represent the myriad loopholes in laws that allow cryptocurrency users to escape taxes. This can be through lending — and borrowing fiat against their cryptocurrency to avoid creating a taxable event, or by evasion, with some seeking to avoid putting winnings in the bank at all, and instead of using cryptocurrency debit cards to spend funds where the authorities can’t see.
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