For the past couple of years, cryptocurrency has been a trending topic of conversation.
However, it’s no surprise why crypto is trending, especially when you think about how it changed the lives of many early adopters, making them multimillionaires. However, one topic you will not find many people talking about the crypto trading platform is taxation.
Indeed, the governments of many countries did not take crypto seriously early enough. For this reason, the governments of many countries were not able to get ahead of them. But today, despite the vast nature of the cryptocurrency market, there will be some new development on how governments will handle the taxation of cryptocurrencies in 2022. Here are the top four crypto trading platform tax trends in 2022.
One thing about taxation is that the government only has what is given to them. The IRS does not have one dedicated system that monitors every individual’s earnings. The IRS can know your earnings based on your employer’s reports. Since cryptocurrency does not have one central body regulating it, it is quite difficult for the government to track who owns what. However, most cryptocurrencies keep a public ledger.
But in 2022, it’s expected that the government will get more reports on crypto activities on an exchange or crypto trading platform. With this report, the government will tell how much you’re spending on cryptocurrency or make from it when you convert from cryptocurrency to fiat. It is also likely that governments in some countries will introduce rules that will facilitate the cross-border exchange of info about transactions. If this is successful, that means everyone will be under the government’s radar.
The EU might introduce legislation in 2022
Currently, the governments of many countries have no legislation dedicated to monitoring crypto space. And even if it does exist, it will be only a few countries. However, there is an update that apart from stepping up reporting on crypto-related trades, the EU plans to introduce legislation. This plan will bring entirely new crypto tax rules into the system. The government will say more about how people trade crypto on a crypto trading platform by introducing this new legislation.
The legislation will give the government more power as it will be strategic to give a simple guideline on crypto transactions. And what is most notable is that the new guidelines will not only be restricted or applied to European countries. For example, in Australia, where crypto investors pay tax on capital gain and staking, with a new regime, it is expected that crypto-to-crypto transactions will no longer attract this tax. However, exit tax will now cover crypto assets.
Most countries aim to tackle taxation in 2022
As you already know, many countries are not in front of the crypto industry. Most countries have only recently begun to pick interest in the crypto space. Hence, in 2022, it is expected that most of these countries will redefine some rules regarding taxing individuals that use a crypto trading platform or an exchange. Call it taking the bull by its horn. After all, they need to record for the government to properly tax.
For this move to be properly implemented, it is expected that the governments of most of these countries will spend a lot of money in 2022. To many people, this means going to great lengths to get a significant percentage of the profit traders make from an exchange or crypto trading platform. And with the way things are going, most cryptocurrencies will have to comply with these rules, especially with the possibility of it becoming legitimate and attracting mainstream adoption.
Certain governments may tax crypto-based wealth
Lastly, looking into the future, it is most likely that certain governments in some countries worldwide will start taxing crypto-based wealth. This future means that the government will get its tax cut from your cryptocurrency even before it is converted to fiat. Why or how is this possible, you may wonder?
Well, come to think of it, the main reason some governments are planning to start taxing crypto-based wealth is that there are many crypto whales in the crypto space that intend to buy crypto and never sell it again. As such, there will be wealth that will never get taxed unless they can introduce legislation that taxes them straight up and not when they use an exchange or crypto trading platform. If the government were to remain quiet about this, it would mean an invasion of tax.