Hi hivers, if you are looking for information regarding "Crypto Taxation vs Traditional Asset Taxation," then you have landed in the right place. Cryptocurrency has made taxation trickier and more difficult, but did you know taxation was always a tougher and more complicated subject before cryptocurrency? Other than crypto, there are traditional assets such as bonds, all types of stocks, and real estate, and these traditional assets already have taxation frameworks that are well established for them because it is still easy to design a taxation framework for traditional assets but crypto, but crypto is superb tough for them. It's confusing to decide for regulators and even investors whether crypto is an investment, commodity, or currency.
Everything is straightforwardly related to tax in traditional finance. Talking about capital gain tax, then bonds and stocks are included there, and it is determined whether it is short-term or long-term. Now coming to the real estate, which is the most popular business too, it has straightforward taxation rules too, along with the structured reporting, exemptions, and depreciation benefits. So in these fields, everything is already set about taxation, so investors have nothing to worry about, and they start a business or investment keeping these taxation rules in mind.
Crypto is treated as a property by most regulators and countries. There are several reasons why they believe that crypto is not currency because it has direct competition with fiat, and they have direct control over fiat, and also personal benefit. As I always said, crypto has a decentralized nature and is not possible for them to control it. Since crypto is property in the regulator's eyes, buying coffee products, trading, buying, selling, or any type of transaction is taxable. So I think this is a burden for individuals, and it should be treated fairly.
Record keeping in crypto is not possible for banks or third parties to monitor because there are multiple wallets and exchanges, also crypto has borderless transactions. In traditional finance, banks and stock market brokers generate detailed statements, and based on that, you can see the taxable gains and even losses. Investors are responsible for recording the transactions in crypto, and this is a headache for them. There is a greater possibility you may miss any transaction record keeping because you are transacting in Defi, NFT, decentralized wallets, DEX, p2p, Web 3, or any platform.
Can you see earth and sky? Can you see the difference between earth and sky? If yes, then now you can match the example with crypto taxation and traditional asset taxation. There is a big difference between them. It will not be easy to regulate and properly tax crypto because there is always a loophole. Just use a decentralized wallet and DEXs, and no one can track you. Crypto is totally different from any traditional asset. If they are applying those old methods to crypto, they are not gonna work here. Taxation should be fair for crypto, which should not harm the innovation. Now I am signing off. TC.
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