Cryptocurrencies wave a red flag for tax authorities worldwide. If people do indeed make money out of them, governments will want to tax the gains It is always a mug’s game to call turning points, but here goes: December 2017, when bitcoin traded at close to $20,000 (£14,500), was the turning point for this cryptocurrency – and probably the others too.

The price today was below $10,000. It may recover, but the general path from now on is down.

The reason is simple. Governments will either ban it or regulate and tax it.

You cannot have a world where there is a huge push to clamp down on offshore tax havens that allows an offshore “currency”. We have already had reports that China and South Korea would ban trading in bitcoin, and that was the immediate reason for the sharp reversal in the bitcoin price over the past 48 hours. (If you believe the numbers some $200bn, about one third of the total value of all cryptocurrencies, has been wiped off their value.) But what is happening is something much more fundamental.

Cryptocurrencies wave a red flag for tax authorities worldwide. If people do indeed make money out of them, governments will want to tax those capital gains, at least in jurisdictions where there is a capital-gains tax. Read more from independent.co.uk…

thumbnail courtesy of independent.co.uk