Crypto assets reporting in CRS - coming soon

[Golden Fleece]

I see a future where one might have a ton of money in bitcoin but unable to buy a house or a car without taking a huge tax hit. This is where the governments will step in and tax it. There is not value in stored wealth if you are not going to enjoy it someday.

That is entirely correct. For the first time (this year), the U.S. Government is now asking every U.S. taxpayer about crypto holdings, under penalty of perjury:

Understand this: the IRS wants to know about your crypto transactions
The 2021 version of IRS Form 1040 asks if at any time during the year you received, sold, exchanged, or otherwise disposed of any financial interest in any virtual currency. If you did, you are supposed to check the “Yes” box. The fact that this question appears on page 1 of Form 1040, right below the lines for supplying basic information like your name and address, indicates that the IRS is serious about enforcing compliance with the applicable tax rules. Fair warning.

When to check the ‘Yes’ box on crypto transactions
The 2021 Form 1040 instructions clarify that virtual currency transactions for which you should check the “Yes” box include but are not limited to: (1) the receipt of virtual currency as payment for goods or services that you provided; (2) the receipt or transfer of virtual currency for free that does not qualify as a bona fide gift under the federal tax rules; (3) the receipt of new virtual currency as a result of mining and staking activities; (4) the receipt of virtual currency as a result of a hard fork; (5) an exchange of virtual currency for property, goods, or services; (6) an exchange/trade of virtual currency for another virtual currency; (7) a sale of virtual currency; and (8) any other disposition of a financial interest in virtual currency.

If in 2021 you disposed of any virtual currency that was held as a capital asset through a sale, exchange, or transfer, check the “Yes” box and use familiar IRS Form 8949 and Schedule D of Form 1040 to figure your capital gain or loss. See Examples 1 and 4 below. If in 2021 you received any virtual currency as compensation for services, check the “Yes” box and report the income the same way as you would report other income of the same nature. See Example 3 below.

When to check the ‘No’ box on crypto transactions. You cannot leave the virtual currency transaction question unanswered. You must check either the “Yes” box or the “No” box.

MSN

 

[marioIT]

The IRS will ask every taxpayer about crypto transactions this tax season — here’s how to report them

I already know a couple of day traders that will have to print it all and then show up at IRS's HQs like this:

 

[calnana]

I see a future where one might have a ton of money in bitcoin but unable to buy a house or a car without taking a huge tax hit. This is where the governments will step in and tax it. There is not value in stored wealth if you are not going to enjoy it someday.

Some already live in a reality where no home bank will accept proceeds from crypto, regardless of taxes. Faft will also start focusing on property soon, making property purchases via crypto (maybe even if the current funds are fiat, but the initial source was crypto) more annoying. Future is very shitty imho.

 

[Don]

Things seem to be moving rather quickly:

Bitcoin drops to $45.5k as Europe votes to ban cold wallets in attack on decentralization

Bitcoin dropped $2,000 from $47,500 to $45,500 in four hours after news broke that the EU is set to cripple innovation in the blockchain space. Today, the European Parliament voted in favor of outlawing ‘unhosted wallets’ within the European Union. Unhosted wallets According to their...

cryptoslate.com

 

[Golden Fleece]

Things seem to be moving rather quickly:

Bitcoin drops to $45.5k as Europe votes to ban cold wallets in attack on decentralization

Bitcoin dropped $2,000 from $47,500 to $45,500 in four hours after news broke that the EU is set to cripple innovation in the blockchain space. Today, the European Parliament voted in favor of outlawing ‘unhosted wallets’ within the European Union. Unhosted wallets According to their...

cryptoslate.com

Wow. That is surely the beginning of the end. That has been everyone's argument regarding keeping crypto anonymous: use anonymous cold wallets, trade only peer-to-peer, and do not use on or off ramps.

You will be able to use anonymous cold wallets outside of the EU for awhile, but other nations will eventually follow suit under pressure from the OECD and others.

 

[JamesDonkey]

"beginning of the end.", "new reality", "it's comming", "it's going to ...."

Panic. Panic!!!!



People would transact directly between themselves.

And how would you regulate decentralized exchanges?

Especially I like those causal links between "event X has just occured and bitcoin has gone up/down". How do you know what's caused it to go up or down this time? It's been going up and down all the time.

 

[Don]

"beginning of the end.", "new reality", "it's comming", "it's going to ...."

Panic. Panic!!!!



People would transact directly between themselves.

And how would you regulate decentralized exchanges?

Especially I like those causal links between "event X has just occured and bitcoin has gone up/down". How do you know what's caused it to go up or down this time? It's been going up and down all the time.

P2P trading without a license is considered illegal in many jurisdictions. Its either breach of AML laws or offering alternative payment services without a license.

 

[JamesDonkey]

P2P trading without a license is considered illegal in many jurisdictions. Its either breach of AML laws or offering alternative payment services without a license.

That what's illegal but can't be enforced, becomes legal.

And when doing p2p with "crypto-fiat" -- the key is not to cross a certain threshold in volume, so that one's p2p activity will fly under radar.

 

[Golden Fleece]

That what's illegal but can't be enforced, becomes legal.

And when doing p2p with "crypto-fiat" -- the key is not to cross a certain threshold in volume, so that one's p2p activity will fly under radar.

No, it does not become legal. That is just plain wrong. It simply means that if you become a target, for whatever reason, the authorities can choose to selectively enforce the law against you.

There is a big difference between legal conduct and currently unenforced laws. Perhaps the U.S. or the EU suddenly builds a massive supercomputer with new technology specifically designed to sort and analyze all past crypto transactions everywhere. What may have previously taken a decade to sort and analyze now only takes a month. Anything can happen, especially with technology now developing exponentially.

So, it pays to always be tax compliant. Why risk your freedom? Find a jurisdiction where you can legally pay 10% to 15% in income tax.

 

[IllIlllIII]

There are plenty of centralized exchanges registered in offshore areas without KYC s**t: Bybit, Kucoin, Okx and etc. Moreover there will be Decentralized Exchanges. Crypto mixers will f**k all CRS attempts to track someone down. Don't forget crypto will become a legal tender in many countries.

So, good luck idiots from CRS to cover that

 

[JackAlabama]

No, it does not become legal. That is just plain wrong. It simply means that if you become a target, for whatever reason, the authorities can choose to selectively enforce the law against you.

There is a big difference between legal conduct and currently unenforced laws. Perhaps the U.S. or the EU suddenly builds a massive supercomputer with new technology specifically designed to sort and analyze all past crypto transactions everywhere. What may have previously taken a decade to sort and analyze now only takes a month. Anything can happen, especially with technology now developing exponentially.

So, it pays to always be tax compliant. Why risk your freedom? Find a jurisdiction where you can legally pay 10% to 15% in income tax.

That is happening for already whatever reason. It can be seen very easily the last two years in EUDSSR when you ask critical questions and concerns about certain events you find yourself fined/imprisoned etc.

 

[JamesDonkey]

Perhaps the U.S. or the EU suddenly builds a massive supercomputer with new technology specifically designed to sort and analyze all past crypto transactions everywhere.

Go further in your predictions.

"perhaps" there'll emerge a new sort of cryptocurrency which is even less trackable/traceble.

 

[RealDude]

Perhaps the U.S. or the EU suddenly builds a massive supercomputer with new technology specifically designed to sort and analyze all past crypto transactions everywhere. What may have previously taken a decade to sort and analyze now only takes a month. Anything can happen, especially with technology now developing exponentially.

Today IBM unveiled the latest mainframe in its storied history, the z16.

The primary use case the company is selling for this monster machine is real-time fraud prevention.

IBM unveiled its latest mainframe, the z16

IBM unveiled the latest mainframe in its storied history, the z16.

techcrunch.com

 

[backpacker]

There are plenty of centralized exchanges registered in offshore areas without KYC s**t: Bybit, Kucoin, Okx and etc. Moreover there will be Decentralized Exchanges. Crypto mixers will f**k all CRS attempts to track someone down. Don't forget crypto will become a legal tender in many countries.

So, good luck idiots from CRS to cover that

Do not think you can outsmart the system. Everything you do electronically is recorded and can be decrypted.
The best strategy is to be tax compliant + take advantage of some sort secrecy along the way: Arrange a zero-tax lifestyle (e.g. live in a country where your activities remain officially tax free) + keep a low profile by not getting reported (e.g. choose a non-CRS country).

 

[Golden Fleece]

Today IBM unveiled the latest mainframe in its storied history, the z16.

The primary use case the company is selling for this monster machine is real-time fraud prevention.

IBM unveiled its latest mainframe, the z16

IBM unveiled the latest mainframe in its storied history, the z16.

techcrunch.com

This mainframe is not even a supercomputer and its processing power is incredible -- and also integrates a real time AI interface. For the last several decades, computers have beaten the best human chess masters in the world. Just try hiding your taxable crypto gains from that processing power. Good luck with that.

The chip has been optimized to run massive workloads, processing 300 billion high-value financial transactions per day with just one millisecond of latency, according to the company.

That’s for customers who have a serious need for speed with heavy volume. The primary use case the company is selling for this monster machine is real-time fraud prevention.

“What’s cool about this latest announcement is we’ve now integrated AI inferencing particularly optimized for fraud detection in real time inside the chip,” he said. The difference here is that there is usually a lag between the fraud being detected and the consumer learning about it. IBM wants to change that with the z16. “Now, that set of customers can access data [that fraud could be occurring] in real time inside the chip.

IBM unveiled its latest mainframe, the z16

IBM unveiled the latest mainframe in its storied history, the z16.

techcrunch.com

So, Donkey Dude, I do not need to predict anything. My mistake. It is already here. Good luck.

 

[IllIlllIII]

Do not think you can outsmart the system. Everything you do electronically is recorded and can be decrypted.
The best strategy is to be tax compliant + take advantage of some sort secrecy along the way: Arrange a zero-tax lifestyle (e.g. live in a country where your activities remain officially tax free) + keep a low profile by not getting reported (e.g. choose a non-CRS country).

There is no perfect system in the world that doesn't have loopholes .

 

[rolex]

But if you have BTC stored in the ledger for example, what they will report? Am I missing something?

No one is going to report anything if you have crypto in your own wallet. How would they? There is zero way to match up money with identity.

The CRS will only apply to crypto exchanges like Coinbase, Binance etc

 

[Golden Fleece]

No one is going to report anything if you have crypto in your own wallet. How would they? There is zero way to match up money with identity.

Read the article cited in post #24.

Any wallet interacting with an exchange will be required to reveal their full identify according to legislation that was just passed in the European Parliament

Unless you keep your BTC in the cryptocurrency universe forever, never using exchanges or other off ramps, you will be forced to comply with KYC laws.

Then there are the new self-reporting laws. Read the article cited in post 21. For the first time (this year), the U.S. government is now asking every U.S. taxpayer about crypto holdings, under penalty of perjury.

So, if you wish to become a criminal, you may get away without reporting your crypto holdings for a while, but technology will eventually catch up with you.

The U.S. and the EU literally employee rocket scientists who sit around all day thinking about this stuff. They will soon use supercomputers and AI to do what was previously hard work, i.e., identifying tax scofflaws.

 

[rolex]

The U.S. and the EU literally employee rocket scientists who sit around all day thinking about this stuff. They will soon use supercomputers and AI to do what was previously hard work, i.e., identifying tax scofflaws.

I genuinely think that this simply won't be possible for governments. Or anyone, for that matter.

Private currencies like Monero are bulletproof and 'AI and supercomputers' just won't cut it for trying to track down who owns what money.

From the article: "‘Unhosted wallets’ will not be banned from existing within the EU, but you will not be able to interact with an exchange to convert your crypto into fiat or vice versa."

So who cares? You could simply just hold stablecoins or keep your crypto as-is. If you did want to trade between fiat and crypto, you could just trade P2P outside of the EU.

 

[Golden Fleece]

If you did want to trade between fiat and crypto, you could just trade P2P outside of the EU.

For the time being, sure. This thread is about burgeoning future developments ("coming soon").

What will the landscape look like for crypto reporting in five to ten years? It might not be recognizable.