The oversight of the millions of cryptocurrency transactions have blinded the way trading was done a decade ago, there are more than one thousand crypto coins, and there are trading platforms at every click in the search engines globally. There are excessively many people who have benefitted from the cryptocurrencytrading; there are claims of overnight millionaires. These people all have cashed in the moment of trades and have silently exited from the entire gamut. while we are still trying to understand and implement taxation for the crypto transactions, people made hay and made a killing profit when the sun was shining and the IRS was still musing to implement laws that are complex for such crypto transactions.
Various countries have come up with their own combination of implementing a tax to curb and regulate the way the online trading is happening at an astronomical pace, software like Bitcoin Code have made different types of trade, manually, automated, robotic, and given huge payouts from the simple strategy used by the trader. In Canada and Germany, the laws placed for cryptocurrency transactions are taxed as an asset. In Japan and Korean countries, there are defined laws and proper streamlining of transactions that come up as genuine and well-traded crypto exchanges. Cryptocurrencies are treated as assets and any failure to pay tax on the sale proceeds will attract a high penalty.
- The obligation of the owner of the coins is irrespective of whether he purchased them in the open market or received or transferred from others as a reward, remuneration or compensation
- swapping crypto coins again attracts tax, as they are converted from one currency to the other, keeping in mind the profit realized from such transaction or, converting them to the USD including the profits earned in the coin currency if they have traded and made profits
- investments for a longer period of time triggers the long term capital gain, while the short holdings of crypto loans, funds in coin currency attracts short term capital gain, the tax slabs for long term capital gain is less compared to the short term gain
- Using the coin currency to be placed as collaterals, and go for loans is beneficial when compared to the cash loans, as there is a scope of advantage to cover the capital expenses and expand their business operation without liquidating any further assets.