G20: Bitcoin is not a currency but an asset

No new regulations. That was the tenor. Now a document has leaked out that could classify crypto currencies as assets rather than currencies.

The document states that digital currencies “have no characteristics of state currencies” and should therefore be considered as assets. As a result, digital currencies could be subject to capital gains tax.

Up to 35 percent taxes
The taxpayer could have to pay up to 35 percent tax:

Up to 35 percent taxes with Ethereum Code

The capital gains tax is […] between 10 and 35 percent, depending on the type of capital income depending on Ethereum Code plus solidarity surcharge. For example, the capital gains tax is 20 percent for dividends, 30 percent for interest payments (so-called “interest income tax”) and 35 percent for table transactions. In the case of dividends in old cases, it should be noted that the capital gains tax must already be paid with the inflow to the shareholder.

Following a classification as an asset, the amount of the taxes and the category of gains from crypto currencies would have to be clarified.

Crypto currencies no state currencies
Klaas Knot, president of “Nederlandsche Bank NV”, said:

I don’t think any of the crypto currencies do the three things that state currencies do in an economy.

Christina Lagarde, Managing Director of the International Monetary Fund (IMF), also recently called crypto currencies “crypto assets”.

Private investor for Bitcoin Revolution

If crypto currencies were regarded as assets, this would run counter to however Bitcoin Revolution is great the decision of the European Court of Justice from 2015, which Bitcoin classified as “real money” and even “equated” state currencies.

It remains to be seen what decision the G20 summit will reach and whether crypto currencies are to be classified as assets. At the moment, however, immediate action seems unlikely.

For the private investor this would probably be a horror scenario, after crypto currencies were tax-free for years after a one-year holding period.

Probably the digital currencies will then follow the regulations of securities. Until 2009, shares were also tax-free for private investors after a one-year holding period. However, if shares were bought before 2009, these were considered to be old holdings at least until today and did not have to be taxed. However, this regulation has now been lifted for fund investors with long-term investments for amounts in excess of € 100,000. Old portfolios for funds no longer exist and profits from earlier “old portfolios” must also be taxed.

Regulations, regulations, regulations
The trend of regulation continues and so does the fear of over-regulation. The problem, however, is not that crypto currencies are regulated, but how they are regulated.

Authorities and committees misinterpret crypto currencies as currencies. It is understandable that these non-state currencies can be equated. Nevertheless, they serve as means of payment and digital currencies are more than useful, especially for the online sector.

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