It will become extremely difficult for the government to tax cryptocurrencies

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Yesterday, I read a report on Cointelegraph: European Parliament members vote in favor of crypto and blockchain tax policies and I can’t help but wonder why these people are naturally just blind to things?

The article linked above in a summary:

In an Oct. 4 notice, the European Parliament said 566 out of 705 members voted in favor of the resolution originally drafted by member Lídia Pereira. According to the legislative body, the resolution recommended authorities in its 27 member states consider a “simplified tax treatment” for crypto users involved in occasional or small transactions and have national tax administrations use blockchain technology “to facilitate efficient tax collection".

There are numerous reasons why crypto taxation will become difficult in the future but we can practically narrow it down to a single point. The idea is basically to tax the conversion of these currencies to fiat, first of all, this would require the government to have a great amount of oversight on what each and everyone uses their money to do on-chain.

When you look at it from one angle, you can just see why the usage of tornado cash was prohibited in the U.S, this is specifically because such a structure increased the government’s difficulty rate of having oversight on things. The blockchain is a huge data set and things can just entangle most of the time, the nature of system investigation makes the usage of these applications a layer more difficult, it is far more than the supposed “usage for criminal activities” that they sell to the media, this was more about the fact that the government cannot have a pin of how value moves, thus, it can neither tax nor seized completing for whatever reason.

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Is Peer-to-Peer a joke to you?

Taxes can easily be avoided by individuals and funny how the authorities don’t realize it. Look at how many stores now accept cryptocurrencies. This number is bound to keep rising over time and there isn’t much anyone can do about it, so in essence, this means that the government can’t tax what was never converted in the first place, see where am I going with this?

Their working patterns are so narrow that they can’t see how very difficult it will be to implement any of these laws.

P2P, are they also blind to that? Most definitely. Users do not even have to sell cryptocurrencies on centralized exchanges, they can easily transact peer to peer, and value gets received and distributed without any trace of where it came from. In which there was no conversion to fiat, there was just a mere human receiving credit from some random account.

While on a small scale, it may seem as though these things can be controlled but on a large scale, they just can’t.

The government would earn more building on the blockchain

The truth is that the government wouldn’t have to even tax cryptocurrency users at this point. It is very easy to get funding and community support around here, people are just willing to contribute voluntarily than be imposed by some law.

The government are in well enough position to build structures that regenerates sustainable income for the nation without having to directly tax individual, the fee structures from trades is a huge revenue stream for companies around here, binance is a huge example here and the government would frankly have a success story being an exchange medium with huge liquidity, this would attract users and users will initiate trades and trades earn fees and fees add up to a fee sustainable income stream.

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The true beauty of blockchain based crypto is that it holds the independent command for its monetary operation and query. No entity -smaller to bigger has any authority to manipulate and curtail the transaction, unless the owner wants to let the others intervene there.

Taxation is something that governments impose upon the citizens and sometimes oppressive rulers try to squeeze people and dictators implement policies that cuts extra amounts from them. These cases werent obsolete, but thats happening around the world.

But, it would really be a tough chase for the government to secure control over decentralization.
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The amazing thing is that considering the nature of cryptocurrencies and blockchain, they do not even have to, there are many ways to extract value from the industry without having to tax individuals.

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