One of the beautiful things about decentralized currency and trading has been the silky gray areas that left it somewhere between the comfort factor of a home-cooked meal, and the rough and ready “anything goes” proposition of a steak over a cowboy fire in the wild west. But the comfort and freedom of that decentralization can be at risk, once the IRS gets involved. For the first few years of its existence, crypto enjoyed an anonymity that made it attractive to all kinds of characters: white hats and black hats alike. So, the good guys and bad guys, no matter who they are or where they come from, enjoyed some degree of separation from the general population, at least as it regarded their activity in virtual currency.
There was also a time when crypto seemed suitable only to those with a pretty good head for tech; early adopters of platforms that might have been risky or difficult to track and manage. These early adopters saw the benefit of crypto because, frankly…the tax authorities didn’t appear to take them seriously. Rules and regulations governing the exchanges were all but nonexistent.
But given the assurity of two certainties in life–death and taxes (with taxes even possible after death), it’s important to understand that the US and other governments are devoting some serious resources to tracking and engaging with crypto users who fail to report.
Trading, interest, fees, mining payments/acquisitions–all platforms and activities are starting to get serious attention from taxing authorities. In the case of the IRS, it all comes down to interpretations of profit.
The concept of profit…and what that means in crypto
