London, UK, 4th Oct 2021, – The value of cryptocurrencies skyrocketed in 2017, as did the number of people who bought them.
The majority were likely unaware that it was possible to be taxed on capital gains for such investments, and didn’t bother reporting their transactions. FinancialCentre’s broker Dennis Vinter says since then, many have probably become aware that they are expected to pay taxes on their transactions.
However, the government has not caught up with the industry yet. According to recent reports, cryptocurrency exchanges are having a difficult time obtaining banking services due to their reluctance of the banks to take responsibility for unpaid taxes by users. As a result, many traders are turning to unregulated exchanges and peer-to-peer trading to avoid taxation.
FinancialCentre’s broker thinks that it is beneficial for everyone, including traders and banks to close this loophole. The representative suggested that closing the cryptocurrency tax loophole would have a positive impact on all parties involved.
Tax regulations regarding cryptocurrencies are extremely uncertain and vary widely throughout the world. In many countries, cryptocurrency transactions are subject to taxation; however, there is no unified body of regulation that covers all jurisdictions. As a result, regulations can differ depending on where you live, which has led to confusion among some investors who treat cryptocurrencies like foreign currency.
According to the FinancialCentre’s broker, this lack of regulation is applying pressure on major financial institutions. Banks are constantly trying to meet their regulatory requirements in order to avoid sanctions and other punitive measures.
“It will be helpful for banks because it should cut down on the anonymity of people.”, said the FinancialCentre’s broker.
The cryptocurrency market is volatile and constantly changing. When regulators begin implementing changes into the industry, investors will need to pay more attention than ever before.
There has been some uncertainty surrounding the blockchain industry lately. Many cryptocurrency investors are growing increasingly anxious about how governments will handle regulations in the future.
For example, there is fear that these regulators could choose to ban cryptocurrencies completely. This suspicion recently arose due to the recent comments by officials that hinted at this possibility. Thus, it is not surprising that investors would be feeling uneasy about the future of their investments.
On the other hand, many investors are excited for regulations on cryptocurrency. These individuals believe that regulations will be beneficial in stabilizing the industry and ensuring that it remains a long-term investment opportunity.
It is worth mentioning that they believe that the lack of transparency in the industry has led to illegal activities, which could potentially cause problems for mainstream adoption.
At the moment, financial institutions are not required to report cryptocurrency transactions to regulators or taxation departments. However, most banks and exchanges do it voluntarily as a good practice for both parties: the trader and the bank.
Most major banking institutions have already established procedures in place to report cryptocurrency transactions. By doing so, they are able to meet the know-your-customer (KYC) requirements and stop illegal activities on their platforms.
On the other hand, there are some financial institutions that do not accurately identify traders or report their transactions; this is why trading cryptocurrencies without paying taxes could still be possible.
In the near future, it is likely that governments will start clamping down on cryptocurrency exchanges and traders who fail to pay their taxes– after all, it is an obligation for citizens to pay taxes in their respective countries.
The FinancialCentre’s broker thinks that the end of anonymity will benefit the cryptocurrency market as a whole.
As regulations continue to shape the industry, it will be important for traders to stay updated.
If you are a crypto trader, it is important to understand how future regulation changes could affect the market. It is also good to keep track of how your country’s tax policy will be changed due to cryptocurrency transactions.
In general, it seems as though closing the cryptocurrency tax loophole is beneficial for everyone involved, including traders and banks. Thus, it will be interesting to see what happens in the market as legislators continue to make changes in the upcoming months.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.