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How Tax Agencies Are Going After Crypto Traders

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Bitcoin investors have in recent months faced increased pressure from various governments around the world regarding unpaid taxes accrued from their holdings.

Tax agencies across the globe continue the regulatory push that has put crypto under the radar, especially in the aftermath of the massive gains enjoyed during the bitcoin price boom of 2017. And although Bitcoin and other cryptocurrencies have since experienced a major tanking esp. over the last 20 months, the focus has shifted gears. Now tax authorities are keen on having cryptocurrency holders file their tax returns properly, and in some cases, are pushing for penalties on potential crypto tax cheats.

Here is how various governments are reacting to the issue of unpaid bitcoin taxes.

U.S.A

The U.S’ Internal Revenue Service (IRS) recently began sending out crypto tax-related letters to some 10,000 individuals. The IRS letters are to the effect that crypto investors may owe the taxman money for cryptocurrency trades they may have carried out in the last couple of years. 

In 2014, the IRS issued guidance that classed Bitcoin and other cryptocurrencies as property, meaning that trading crypto among other activities is a taxable event. Thus, taxpayers who made profits on their crypto face penalties and tax on cryptocurrencies, ranging from 10% to 37% but the exact tax one owes depends on how long they held the assets.

Stiffer penalties and prosecution

The IRS is after those people who failed to file returns or misreported their crypto taxes. The only good news is that individuals have the option of filing amended tax returns before the agency goes after them. Stiff penalties related to tax fraud or evasion are likely to be handed out to those that do not heed the notices.

United Kingdom

In the United Kingdom, the tax agency, HM Revenue & Customs (HMRC) recently asked several cryptocurrency exchanges to provide customer details for taxation. Affected exchanges included Coinbase, eToro, and CEX.io.

HMRC’s move followed that of IRS and is targeted at using the provided information to track down people who may have failed to pay taxes on their cryptocurrency holdings. The HMRC issued a guideline in 2018 suggesting that crypto holders were required to pay capital gains tax and income tax. The agency has also maintained that it has the power to ask cryptocurrency exchange service providers to submit the required information as crypto trades result in potential tax, an end that falls within the tax body’s jurisdiction.

Generally, the U.K has identified corporate tax, individual income tax, and capital gains tax as chargeable on transactions involving cryptocurrencies.

Sweden

Sweden has begun taking strict action against those who have held or used crypto and failed to declare taxes. A marked increase in crypto usage and investment in the country has seen authorities seek up to 30% in taxes from crypto income.

The reaction from the Swedish Tax Agency (STA) has been swift in recent months. One trader had up to five STA officers raid his house after he received a mammoth tax bill related to his crypto trades. Linus Dunker says that his $2.9 million crypto trades have attracted a tax penalty from the STA amounting to $1 million- that’s almost 300% of the trades instead of just 30%.

Dunker isn’t the only one though. Several bitcoin traders in Sweden have received tax bills, with the STA investigating up to 400 individuals who could be prosecuted for failing to pay taxes on their crypto holdings.

Earlier this year, the agency issued a deadline of May for those who sold, paid for goods or services, or were paid in crypto, to declare their taxes.

Australia

In Australia, crypto holders and traders have been advised to report their due taxes with the Australian Taxation Office. The agency recently issued guidance that classed bitcoin and other top cryptocurrencies as “property” meaning that taxpayers need to pay capital gains taxes on these assets. Crypto taxation in Australia is quite similar to that in the US.

Brazil

Brazil’s Department of Federal Revenue recently issued guidance asking crypto traders to report all their crypto transactions above $7,600 to the country’s National Treasury. The directive went into effect on August 1, and anyone who fails to comply faces fines and interest.

South Korea

South Korean’s National Tax Service recently announced that using bitcoin attracted tax. While it hasn’t gone after specific traders yet, the agency’s reaction to bitcoin’s boom is to find ways of incorporating bitcoin use into the country’s tax rules on capital gains and VAT.

India

The country’s Central Board of Direct Taxes (CBDT) has said that bitcoin traders who fail to file or pay taxes face action. The government recently began sending notices to people it said had not paid taxes on bitcoin.

Switzerland

Switzerland is known as a crypto-friendly country, with several crypto-focused organizations headquartered there. The Swiss government treats bitcoin as a foreign currency, which is how it is classified for taxation purposes.

Overall, miners and those that receive their salaries and wages in crypto need to pay income tax while crypto trading attracts business tax. Traders may, however, qualify for an exemption from capital gains tax if they do not trade in a professional capacity.

What should you note as a crypto trader?

Simply, crypto taxation isn’t going away and filing returns on time is the way to go. It is quite unfortunate that a bigger part of the challenge facing investors and tax authorities is the categorization of crypto for taxation purposes. In this regard, some countries classify bitcoin as property, while others classify it as a commodity, financial asset, or foreign currency. Either way, you should be ready to pay taxes on your crypto. Failure to pay these taxes could result in criminal prosecution and hefty penalties.

About the Author: Robin Singh is the co-founder and CEO of Koinly.io – a cryptocurrency tax platform that automatically generates capital gains reports for USA, Canada and Sweden among other countries.

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Bridge Mutual Announces Partnership with Plasma.Finance to Strengthen DeFi Insurance

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Bridge Mutual, a decentralized insurance provider, has announced a collaborative partnership with DeFi aggregator PlasmaPay and Plasma Finance allowing users to directly fund or provide liquidity through the Bridge ecosystem and the Plasma Finance platform.

Bridge Mutual will also use some of its own liquidity to start a PlasmaPay insurance pool, integrating shield mining in order to give users the chance to earn PPAY tokens as a reward for providing coverage to PlasmaPay. The result is an increase in users on the decentralized insurance platform for Bridge Mutual, and another dimension of safety for PlasmaPay and Plasma Finance users.

“This partnership will give both organizations the ability to expand operations into the other’s platform, a net benefit for two strong projects looking to optimize the DeFi market as a whole,” notes Ilia Maksimenka, PlasmaPay’s CEO, “Ease of use and access to insurance ultimately benefits users. By working together, Bridge Mutual and Plasma Finance take DeFi a step forward towards more reliable financial services on the blockchain.” 

Bridge Mutual CEO Mike Miglio adds, “The main focus of our partnerships is to increase the overall safety of the DeFi space by encouraging users to protect each other. Partnering with PlasmaPay was strategic in that users will be able to easily purchase or provide insurance directly from the Plasma Finance app where they manage all…

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Dignitas Joins Zytara Lineup, a Step Towards Uniting Esports and Blockchain

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Esports icon Dignitas has come together with fintech company Zytara to tackle payments and value transfer within esports using the DigitalBits blockchain.  

Dignitas’ partnership with Zytara is the first major alliance between esports and blockchain, a combination set to overhaul the esports’ financial mechanisms.  Zytara, a fintech launching a digital banking platform and payment network for gamers and esports enthusiasts, will leverage the DigitalBits blockchain to power the use of stablecoins and other digital assets.  

Despite their global scope, esports organizations still struggle with traditional payment rails.  Notably, Epic Games experienced difficulties distributing some of their $100 million prize pool for Fornite tournaments.  With esports growing rapidly, this is something that must be addressed, and it appears that Dignitas and Zytara are coming together to lead the charge.   

Dignitas has championed many firsts for the industry, being the first ever esports team to be acquired by an ownership group of a North American sports franchise, Harris Blitzer Sports & Entertainment (HBSE).  Dignitas would later go on to sign a first-of-its-kind sponsorship deal with Susquehanna International Group, LLP (SIG), one of the world’s largest proprietary trading firms.    

Zytara will issue a series of Dignitas-branded debit cards and app skins, featuring the…

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XENO starts VIP NFT trading service and collaborates with contemporary artist Hiro Yamagata

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Hong Kong, Hong Kong, 24th December, 2020, // ChainWire //

The XENO NFT Hub (https://xno.live) will provide a crypto-powered digital items and collectables trading platform allowing users to create, buy, and sell NFTs. Additionally it will support auction based listings, governance and voting mechanisms, trade history tracking, user rating and other advanced features.

As a first step towards its fully comprehensive service, XENO NFT Hub launched a recent VIP service to select users and early adopters in December 2020 with plans for a full Public Beta to open in June 2021. 

“NFTs are extremely flexible in their usage, from digital event tickets to artwork, and while NFTs have a very wide spectrum of uses and categories XENO will initially focus its partnership efforts and its own item curation on three primary areas: gaming, sports & entertainment, and collectibles.”, said XENO NFT Hub president Anthony Di Franco.

He also added “This does not mean we will prohibit other types of NFTs from our ecosystem However, it simply means that XENO’s efforts as a company will be targeted into these verticals initially as a cohesive business approach.”

Development and Procurement Lead, Gabby Dizon explained, “Despite our initial focus, we found ourselves with a unique opportunity to host some of the works of Mr. Hiro Yamagata. We are collaborating with Japanese artist Hiro Yamagata to enshrine some of his artwork into NFTs.”

Mr. Yamagata has been…

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