Officials Grapple with the Tax Issues Presented by Crypto

If there’s one topic that has captivated the public for over a year now, it’s cryptocurrency. However, the technology is evolving so quickly that many governments are unsure of how to proceed amid the breakneck speed. While Japan has its own official crypto, U.S. regulators and investors have been slower to adapt to a world with cryptocurrency. With big-time investors such as Charlie Munger even going as far as to refer to crypto as “evil,” it would appear that there is some serious work to be done.

 

With new cryptocurrencies popping up all over the planet on a daily basis, tax professionals the world over are going to need to figure out how to manage their clients’ investments, expectations and payment systems. Indeed, crypto stands poised to take over the world—and businesses should pay careful attention. Even though the whole point of crypto is that it is unregulated, we are seeing more and more regulations pop up on a daily basis—and many in the crypto space believe that this is a very good thing. After all, regulations are a sign that crypto is becoming more mainstream. And the more mainstream it becomes, the faster governments will be able to institute rules that will make it possible to buy a coffee with your crypto. In this new environment, which many have referred to as the gold rush of the twenty-first century, a multitude of people have been able to share in the wealth of these burgeoning economies.

Japanese Cryptocurrency Soars

When it comes to cryptocurrency, the nation of Japan has had an interesting approach. In fact, it is purported that the original creator of Bitcoin, an individual known as Satoshi Nakamoto, was Japanese. However, no one really knows whether or not this is actually true. What we do know for a fact is that Japan has its own cryptocurrency. Known as Monacoin, this cryptocurrency was actually started as a joke. In fact, the founder, a person called Mr. Watanabe, wanted Monacoin to operate as a type of game currency. But the Japanese people had other things in mind.

 

Boasting a cat emoji for its logo, Monacoin was started back on January 1, 2014. With users and developers adding their input, this crypto has become much more advanced than it originally was. With one Monacoin equal to approximately $3.74 at this point, Japan appears to be priming its infrastructure for this crypto to stick around. In fact, some people are even pushing to use Monacoin to buy real estate—and the markets are listening. Some brick-and-mortar stores, as well as online outlets, have also started to accept Monacoin. Additionally, a Twitter users have set up a tipping system that allows them to send Monacoin to others.

 

After the collapse of Mt. Gox, the Japanese people craved a cryptocurrency that could be seen as more stable and secure—and they have found this in Monacoin.

China Crafts New Cryptocurrency Rules

As in so many other countries, the leaders of China have been grappling with the way in which they intend to handle the issue of cryptocurrency. Recently, they made their opinions a bit more clear. In fact, Chinese regulators are honing in on offshore transactions that Chinese nationals have made in regards to crypto currency. Strict laws will be imposed, and those who do not follow the current guidelines will be punished by having their bank accounts frozen and perhaps even having some of their assets taken over.

In a global economy that has gone crazy for bitcoin and other cryptocurrencies, it’s not difficult to see that the actions of these regulators will have a huge impact upon the world economy at large. This, of course, is a far cry from where China one stood in relation to cryptocurrency. In fact, China was once a haven for cryptocurrencies. However, recent rules and regulations have been put into place, and those who have invested in crypto currency‘s are feeling the pain. Perhaps this is why so many offshore platforms were created in order to serve as a sort of loophole, allowing Chinese citizens to participate in the crypto craze. However, it is recently become obvious that authorities are aware of these loopholes and are taking major steps to ensure that they are closed up.

Bank of Indonesia Warns about Cryptocurrencies

While the prices of cryptocurrencies have risen exponentially in the past several months, new investors and speculators are betting their money on further rises. Yet, another country is warning its citizens. According to Bloomberg, Bank of Indonesia has just issued a warning about owning and trading cryptocurrencies.

“Owning virtual currencies is very risky and inherently speculative,” claimed the central bank. It has also warned about a forming asset bubble and money laundering with digital tokens.

Other countries are cracking on digital currencies, too. China is looking to discourage digital currency mining, while South Korea’s central bank is prohibiting its employees from trading these assets.

While many think that digital currencies are the future, not every one is so sure. Not long ago, Warren Buffet has called bitcoin a bubble. The proponents of bitcoin, however, say it is of limited quantity as only 21 million bitcoins will be issued. But the critics reply it’s 21 million of “digital nothingness.”

Cryptocurrencies generally rely on the blockchain technology. This technology will be adopted for future financial transactions, and this can happen without bitcoin. What’s more, there are other technological forks such as Bitcoin Cash. And countless other cryptocurrencies coming to the market. Some of them are worthless. For example, a parody digital token, known as Dogecoin, hit a $2 billion valuation.

No wonder the governments and central banks are warning their citizens. But, the party goes as it’s 1999, the time of the Dot Com Bubble. Some even compare the current speculative mania to the Tulipmania of a few centuries ago.