Many countries are now actively considering how to deal with cryptocurrencies (CC’s) because they do not want to miss taxes, and to some extent they believe that in order to protect consumers, they need to adjust this market space. Knowing that there are incidents of fraud and hacking and piracy, it is worth mentioning that consumer protection is considered at these levels. The Securities and Exchange Commission (SEC) was established in the United States for this purpose, and the SEC has established some regulations for CC exchanges and transactions. Other countries have similar regulatory agencies. Most countries are working hard to formulate appropriate regulations, and these “rules” are likely to last for several years as the government finds effective methods. Some of the benefits of CCs are that they are not controlled by any government or central bank, so it can be an interesting tug of war to observe how much regulation the government will impose over the years.
For most governments, the biggest concern is the potential to increase revenue by taxing the profits generated in the CC market space. The central question to be solved is whether to treat CC as an investment or a currency. So far, most other governments have tended to treat CC as an investment, just like all other commodities that use the capital gains model to tax profits. Some governments regard CC as the only currency whose relative value fluctuates daily, and they will use tax rules similar to foreign exchange investments and transactions. Interestingly, Germany has crossed the fence here and decided not to levy taxes on CC that is directly used to purchase goods or services. If we often use all these investment profits to directly buy something (for example, a new car), then all our investment profits can be tax-deductible, which seems a bit confusing and infeasible. Maybe Germany will fine-tune its policy or reconsider it as they move forward.
Given that there is no consistent global law that requires CC exchanges to report CC transactions to the government, it is more difficult for the government to enforce tax rules. The global and distributed nature of the CC market makes it almost impossible for any country to understand all transactions of its citizens. Tax evasion has occurred because several countries provide global banking services, which are often used as tax havens, thereby freeing funds from taxation. At that time, the nature of CC was naturally born in areas where the government lacked supervision, with both drawbacks and drawbacks. It takes time for the government to complete all these tasks through trial and error-this is still brand new, which is why we call CC and blockchain technology “game changer”.