Ever so often I ponder about the beliefs of this space – the decentralization, the financial sovereignty, the hash wars, the trust in the code campaigns and even the biased opinions we all have for particular assets.
Nevertheless, there’s always one question which keeps everyone in a dilemma i.e. should we work with the regulators or against them? Because after all to ban Bitcoin you need to switch the internet off worldwide so nobody can really ban it now, can they?
My opinion here has always been that the very essence of cryptocurrencies lies in financial sovereignty that is achieved through its decentralization. Which can never be attained through centralized authorities monitoring it. But, to get to a state where we manage our own wealth, we need alliances! This needs to be accomplished strategically rather than being sentimental about the emotions we have with the very ideas of higher adoption through decentralization.
Hear me out before hatin’.
Countries regulating cryptocurrencies
The countries that support the usage of cryptocurrencies have multiple regulations built around it.
For instance, the U.S. has implied financial regulations on transactions in digital assets. Additionally, the CFTC [Commodity Future Trading Comission] has declared crypto as commodities and even the SEC [Securities Exchange Comission] has classified it as a security.
But of course, the US citizens who deal with cryptocurrencies have to pay their taxes for the earnings they gain on cryptos.
On 26th July, the IRS [Internal Revenue Service] released a notice for all crypto investors to pay back the taxes they owe on unreported cryptocurrency earnings. The notice said:
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,”
Chuck Retting, the IRS even said that IRS is expanding their efforts involving virtual currency, including increased use of data analytics. They are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.
This is one of the most bullish news for the cryptospace. A regulated framework to manage your own wealth and earnings. Many here, might not agree to the same which is why it’s extremely important to understand the difference between financial sovereignty and freedom to not pay taxes.
Not paying taxes is not a part of financial sovereignty
Cryptocurrencies do not need to be recognized as legal tenders. They are assets, like gold, silver, diamond, etc with the additional feature of being a store of value and at all times should be treated as one.
Cryptocurrencies let you manage your own wealth, you don’t depend on any other party, you make P2P transactions with no central authority. But this doesn’t mean you can run away from the basic duty of paying taxes. Your taxes are what you owe to the state for everything it provides you with [don’t be an a-hole by asking what the state really provides for you].
Cryptocurrencies that work with regulations
One of the cryptocurrencies that is really making a change is XRP. The Ripple team is doing what they are best at – working with banks for high adoption of cryptocurrencies to solve real financial barriers.
They’ve entered a regulated market, they connect XRP to fiat and which is why they are in the position to provide solutions.
That said, people in this space need to understand that if we connect Bitcoin to a fiat value and convert the same, it has consequences and questions to be answered. Even if you’re a trader or miner at some point to use your earnings you need to convert it into fiat [until higher adoption comes into the picture] and this is where you owe an explanation to the regulators but its still you who manages your wealth.
Centralized decisions of crypto exchanges
Additionally, in early 2019 CZ, the CEO of Binance – largest exchange by volume had personal grudges towards Craig Wright [Faketoshi]. Rather than thinking rationally, he made the decision to delist BCH SV the coin that Craig promotes. Which had a domino effect resulting in multiple exchanges delisting BCH SV eventually leading to a price crash.
This was the decision of a single man who was influential enough to put thousands of BCH SV investors funds at stake. If the space was regulated, or maybe some strict guidelines would have been provided. This definitely would have been prevented.
Exchanges should follow high standards of neutrality and regulations are necessary to achieve this.
The debate for financial regulators getting into the crypto game is pretty healthy. It is a must for the digital asset industry to recognize regulated policies for higher adoption. It is essential that the space and the investors of it have an idea about the quality of projects we invest our wealth and time in. Additionally, to ensure the technical advancements of this space is scalable we need to test it, check it and experiment with it – all of this is easy when we have more support be it from the community or the regulators.