Crypto adoption (Nano in particular) and taxation of it as a result of being treated as "properties" in most countries

The question is not specific to Nano for sure, but since we seems to have the best tech for p2p transfers and the best community - I'm interested to know what the community think about the subject.

Assuming that average Joe already have some nano and started using it on a daily basis he'll need to include every single of such transactions in the annual tax report in most of the countries today. So even if he was that lucky and spend all his nano for the same $ equivalent that he acquired it early (not gonna happen, but the question is not about gains and loses of money because of it) - he still need to do this routine of collecting/remembering/tracking of his expenses for the report during a year. This particular formality to me seems as a huge obstacle on the way to adoption not to mention the fact that you have to expose all your personal spending habits in a very centralized and organized way just to justify that you do not own (or have paid enough) taxes.

PS. Lets do not go into "you don't have to report some/all transactions" as if you plan to spend your crypto on something substantial in the future (assuming it will not go to 0 in value) - you'll have to report the source of the income to justify the corresponding expenses if (or most likely "when") asked.

IMHO, Nano will reveal itself to be incredibly useful as a financial layer over existing legacy systems. If so, a number of strongly compelling applications will come out of the woodworks that will compel the masses to begin to use this in everyday life (without actually having to worry about how to send or receive). This environment will cause a trickle-up effect where lawmakers are inundated by requests from their friends, family, and more importantly, their constituents... to reconsider archaic laws to better fit a modern economy.

At that point, we can have a more educated conversation around how to structure reporting laws (e.g. no taxes for spend under $300, capital gains for fiat/Nano investment, but not everyday purchases, etc., etc.).

Until then, it is up to us to be creative and power the backbone of this economy with unique services ( <3 DPOW ) and innovative applications.

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nanoodle tracking of price at transaction time and providing csv downloads was in part to help with this.

Are you referring to this? I was looking for the CSV downloads part, but could not find it. That does sound useful!

Also, nice job on the Live! part of your site. Looks pretty :slight_smile:

Oh well, I think we can just ignore the law makers, as the system is decentralized, the moment we stop using their money and adopt Nano as an everyday currency. The only thing the lawmakers can do to stop this is use violence against peaceful shop keepers and entrepreneurs to force their coin as exclusive. At which point people would revolt against central banks, like Iranians did.

They will use their strongest weapon, the law. They don't need violence.

I'm pretty sceptic about this segment of cryptocurrencies. Banks have to go through an enormous amount of regulations regarding terrorism prevention and anti-fraud. What makes you think governments will just let cryptocurrencies bypass those regulations?

I'm a cryptocurrency supporter so I'm playing the devils advocate here, but those are some issues that have to be addressed sooner rather than later. The cryptosphere should have large lawyer taskforces lobying in the EU parliament and the USA senate to pass some laws, but in my opinion it's not in the best interest of the ruling minority so cryptocurrencies are destined to stay on the edge of society.

Prove me wrong, please!

It's possible that in the future cryptocurrency will be taxed based on the type of usage.
I can imagine a different tax for using cryptocurrency as money on the one hand and as a means of speculation on the other.
Speculation would then be taxed like stock trading, whereas tax free amounts are introduced for using cryptocurrency as money or maybe the tax is waived completely.
You may ask what's in it for legislation and tax authorities. Mainly two things.

  • if people indeed start using cryptocurrency as money and have to include each transaction when they file taxes, tax authorities will be swamped by the load of paperwork
  • in difference to fiat money transactions using cryptocurrencies with a public ledger leave a trail. That trail can be useful when investigating tax (e.g. spending money that was traded at an exchange without paying taxes) or crime related transactions

Depending on the far-sightedness of governments this future is more or less like, or happens sooner or later, respectively.

That regulation already applies to cryptocurrency exchanges (in most countries) and it's useful there.
Using cryptocurrency as money is a different animal and using cash leaves no traces. For that reason cash payment limitations are already planned or in place in the US and in Europe. I bet other countries and regions have or will have such limitations. Those cash payment limitations can be applied to cryptocurrency payments, problem solved.

The digital money to cash comparison isn't as relevant as using a "foreign" currency to buy something in a sample country. France has laws that forbid selling goods for any currency that isn't the EURO, why would they allow NANO ?

Do they allow Bitcoin?

It's easy to say this if you're simply using the applications/services that are put out there.

However if you're actively developing a Nano-fueled application/service that you intend to profit from.... It becomes much unwise to ignore the law, especially in the US.

If you can develop a Nano-fueled application that you can anonymously profit from, it's a bit of a different story, but in my opinion, the vast majority of anonymous apps struggle to really take off + if they do, now you have interested parties looking for your identity. I don't want to spend my life looking over my shoulder for Johnny Law.

IMHO, there are plenty of legal ways to develop useful Nano apps/services. One just has to think creatively. It may take generations before we can bring our legal system up to date, but if there are enough useful Nano-powered apps/services, that change becomes inevitable.

I don't think a restaurant can print a receipt in BTC. Until paying directly in a cryptocurrency is legal in a country, the payment has to go through many channels to settle in a local currency making it impractical. I hope Kappture and Appia have thought of some way to solve this.

Nano came to a point where technology is no longer the factor holding back adoption. Lawyers and regulators have to do the work now. Sadly, that is not my field of expertise and not the field of expertise of most people in the cryptosphere.

I agree with the part about the payment going through many channels.
But I beg to differ regarding this being impractical.
It's rather that practical options aren't widely available.

But for businesses in the UK the combination of Kappture and Wirex already allows a quite simple workflow to receive payments - at least if I understand it correctly.

It's as follows.
A business registers a Wirex business account and uses the associated Nano address as receiving address for the Kappture Nano payment module.
The business receives Nano in the Wirex account and can easily convert it to GBP on a regular basis. Maybe there's even an option for automatic conversion at Wirex. I don't know, because I have neither a private nor a business account there.

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If the fees for using Wirex are lower than conventional credit/debit card fees and if the legislation is in order, then this might be a plausible payment model.

Is there anyone who has built a service that utilizes Wirex with Nano?

I don't know about the conversion rates at Wirex and you are right - they play a crucial role.
Especially for small amounts Nano has an easy time beating credit card fees.

Credit cards typically have a percentage fee of up to 3% and a transaction fee of at least $0.10 (I'm sorry that I couldn't find that fee scheme at Visa or Mastercard in a rush, but only third party information). And for small amounts the the transaction fee makes accepting credit cards expensive.
Same is true for other payment methods like Paypal (2.9% + $0.30 US domestic; 4.4% international transaction fee plus a fixed fee based on currency received ), and Square (2.6% + $0.10).

So for small amounts Nano is a pretty good alternative to credit cards, Paypal, Square and alike and should be able to beat Wirex fees, even if they are slightly above the fees of cryptocurrency exchanges making it in the end one of the cheapest options.
For bigger amounts than a few USD Nano is also good, but the smaller the amount the easier for Nano to be one of the cheapest options.

One problem when accepting Nano is the fluctuation of exchange rate. You don't want the saved fees being eaten by a dropping rate. The above workflow with the option to convert the Nano regularly (or even automatically) offsets that risk to some degree.

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A service could be built take takes the risk away from merchants for a fee.

The whole chain of services needed to perform a legal, everyday transaction is quite complicated but so is the current working model by EMV. Who knows what the future holds?

Thanks for the discussion!

It was my pleasure!

Wirex offering the setup of an automatic Nano/fiat conversion upon receiving Nano would meet the requirements. If that works we just need Wirex in more regions and more companies like Wirex to take it to the next step.

Bitcoin was created to bypass tyrannycal laws, that's its sole purpose.

Once usable solutions to tracking profits and losses that integrates with the on-ramps and wallets people use will likely feel the burden lifted and more comfortable using it.
Will take time though

Actually, Kappture already built a whole back-office system which also settles Nano to your local currency. I don't know the details on how it works but they showcased it in one of their videos.

Hopefully it integrates into something the wider ecosystem uses. Maybe the Manta protocol with Appia offers this integration