Spending Bitcoin (BTC) may be easy, but mainstream users are avoiding it. There may be one reason – the recent interest of the taxman in digital coins.
Bitcoin Income May Create Taxable Event
Not only US citizens, but also internationals, see the usage of BTC as creating a taxable event. Certainly, the IRS and other entities are not tracking the BTC transactions just yet. However, there are tools to see revenues recognized from crypto-related services.
But there are also doubts that even buying and selling with coins may become taxable, if value was exchanged or services rendered. For most countries, however, an incoming BTC transaction is not counted toward personal or corporate income.
Bitcoin is still not being used for one chief reason – betting on outlandish price appreciation, or even short-term price swings. There is limited options for spending bitcoin on certain luxury goods markets, and other than that, dark market usage is not counted toward the mainstream acceptance of the coin.
Spending BTC is also difficult in periods of increased volatility. In the past month alone, bitcoin price has moved up more than 42% in a day, only to erase the gains and return from $9,400 down to $7,400 in a couple of weeks. For both spenders and merchants, this may discourage usage, especially given the highly distant opportunity of seeing BTC rise to $100,000 or even $1 million and above.
Some countries are stricter than other – Japan, for instance, traces each transaction as a taxable event.
“In Japan as well as the US, tracking every single payment in cryptocurrencies (Bitcoin and others) is required for tax reporting,” Cryptact CEO Amin Azmoudeh said for Longhash.
Fintech Solutions Help Some BTC Deals
As the end of 2019 approaches,