"Tax authorities like the IRS, HMRC and ATO classify crypto as a capital asset, meaning that sales, trades and even swaps are considered taxable events. Tax authorities worldwide are coordinating through frameworks like the FATF and the OECD's CARF to track transactions, even across borders and privacy coins. Authorities use blockchain analytics firms like Chainalysis to link wallet addresses with real identities, tracking even complex DeFi and cross-chain transactions."
"Cryptocurrency is taxable because authorities such as the Internal Revenue Service (IRS) in the US, His Majesty's Revenue and Customs (HMRC) in the UK and the Australian Taxation Office (ATO) in Australia treat it as property or a capital asset rather than currency. As a result, selling, trading or spending crypto can trigger a taxable event, much like selling stocks."
Tax authorities classify cryptocurrency as property or a capital asset, so sales, trades, swaps and spending can trigger capital gains or income tax events. Income from staking, mining, airdrops and yield farming is taxable based on fair market value at receipt. Authorities coordinate internationally through frameworks like the FATF and OECD CARF and use blockchain analytics firms to link wallet addresses to real identities, including tracking privacy coins, DeFi and cross-chain activity. Detailed records of timestamps, amounts, market values, staking rewards and gas fees are essential for accurate calculations. Failure to report can lead to notices, audits, penalties, interest and criminal charges; remedies include amending returns, voluntary disclosure, and paying taxes owed.
Read at cointelegraph.com
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