Millions of North Americans barter, buy, sell, and trade goods and services every day in various forms with swap meets, Facebook marketplace, Craigslist, and directly with friends or neighbors
Technically, you are supposed to track the dollar value of every barter and/or exchange you make over a specified threshold and report that to the government and pay taxes on each of those transactions, whether you traded Pokemon cards, lawn furniture, dildos or children’s toys. That is how taxation works, but it is not reasonable to ask that we report every single trade in life and pay tax on it.
If you hold your crypto in a non-KYC, non-custodial decentralized wallet, and only swap in DeFi or on non-KYC exchanges, then there is no proof of the taxable event, and no user ID, so I would suggest that in order to at least be tax-compliant to their best ability, when they cash-out crypto to fiat currency into their bank accounts, that they declare that amount as income, and pay their share of taxes on it. That way, the income is at least declared and the g-men can
steal collect their tax share on their fiat. That is reasonable.
If you’re just a casual retail hobby investor normie who uses a site like Coinbase or something, then yes, your tax obligations are simple and fair to calculate. Otherwise, the government needs amendments to the current antiquated tax rules around crypto, as they are out to lunch. Imagine this year’s tax burden now that there are literally millions of tweens, teens and adults minting, selling, swapping 100’s of millions of NFT’s, crypto game tokens, assets, and services, all done without fiat and decentralized. Good luck with that!
There are also thousands of employees now being paid in Ethereum and Bitcoin, not to mention the 10’s of thousands of blockchain developers who need to transact with crypto just to do their jobs, develop and test their apps. Are they to now track every single Ethereum transaction they ever made since 2015 and pay capital gains/losses on their gas fees?? It’s a huge clusterf**k and the IRS and CRA know it, which is why they are asking for people to submit what they can, and at the very least, report any crypto gains that you exchange into fiat into your bank and please pay them some tax.
I don’t think most people understand the enormity of what is about to happen very quickly over the next few years
A global financial shift is already underway, and it is going to rock the foundations of centralized national currencies forever. Cryptocurrency IS the money of the future and the governments will increasingly have no choice but to get on board. No one wants their deflating fiat anymore. Cash is dirty, inefficient, and dying fast and hard. The banks don’t even want your money, which is why they charge you to store it and don’t pay shit for interest. It’s only real estate and gold they love, and soon, blockchain assets, like Bitcoin.
If governments are truly serious about taxing crypto to crypto swaps, then they must accept those same currencies and/or stable coins as payment for taxes. Otherwise, they only further hobble themselves into impotence. It’s just going to be far too expensive trying to process all ‘crypto tax-evaders and eventually they’ll have no choice but to change regulations so that cryptocurrency users have a simple and fair method of reporting and paying taxes.
Remember Napster? BitTorrent? And the hundreds of millions of tax-payer dollars the IRS wasted trying to prosecute those users, while Netflix and others literally just created a centralized, fair, and taxable service? The same thing is happening right now with blockchain technology.