Cryptocurrencies are digital currencies that have significantly increased in value over the last few years. No country or central bank issues these currencies; instead, they are generated through mining. Mining is achieved by solving complex computer mathematics problems and receiving new cryptocurrencies.

Cryptocurrency is a form of digital currency that uses cryptography to control the creation and transfer of assets. Cryptographer Nick Szabo first used the word cryptocurrency in a 1994 paper. Any country or government does not back cryptocurrencies but rather the market value of transactions, goods, and services. Research has shown that an industry-wide tax on cryptocurrency transactions could raise as much as $18 billion annually. There’s no denying the influence cryptocurrencies have had on our lives in 2018.
For consumers. Cryptocurrencies are quickly becoming the new norm, but competition is heating up for the top spot. Ripple, Ethereum, and Litecoin want to be Bitcoin’s top dog. To do that, they need an incentive for consumers to use them over Bitcoin. That incentive is called a “digital asset exchange market .” XRP, ETH, and LTC are all making strides to be the first digital asset exchange market with popular applications like RippleNet, Ethereum, or Lightning Network. XRP is currently taking the lead with a $2 billion daily trading volume at its peak. The number of use cases for cryptocurrencies is staggering as well. It’s no wonder that there.
Cryptocurrency was initially created to replace the outdated and inefficient financial system. Transactions are performed with fewer fees and no third-party involvement. They can be done without personal information or credit cards, which is why they’re so popular among the unbanked population.
The IRS has not officially ruled on whether cryptocurrencies are property or currency, which can lead to confusion.
The IRS, Department of Justice, and the US Securities and Exchange Commission are investigating the issue.

We will discuss the taxability of crypto assets and how it makes life difficult for people holding these assets. We will also discuss the top five laws that apply to cryptocurrencies in India, which are:
1) Income Tax Act, 1961
2) The Wealth Tax Act, 1957
3) The Transfer of Property Act (Amendment), 2005
4) The Foreign Exchange Management Act (FEMA), 1999
5) Prevention of Money Laundering Act, 2002.

Crypto Taxation: India vs US compared.

Crypto assets are called “virtual digital assets” in Budget 2022. This means the government doesn’t refer to them as “real estate,” bonds,” or any other traditional asset class. A new provision that has been put in the income tax law has been concerning the taxation of virtual assets, such as Bitcoin. This means you must pay a 30% tax on your profits from crypto asset transfers. This law does not allow for any deductions from this rule. The increase in the value of crypto assets is not guaranteed. There are uncertainties surrounding the future of cryptos, such as a lack of regulation, which may decrease their price. This law’s first enactment is to increase taxes on crypto assets transferred to other countries, particularly those with high tax rates.
Furthermore, this law also imposes a 15% capital gains tax on crypto assets. The increase in the value of crypto assets is not guaranteed. There are uncertainties surrounding the future of cryptos, such as a lack of regulation, which may decrease their price. This law’s first enactment is to increase taxes on crypto assets transferred to other countries, particularly those with high tax rates.
A new provision has been introduced for taxing cryptocurrency. It will add a tax on all profits earned from selling, trading, or buying cryptocurrencies. The new tax proposal will not be implemented concerning crypto traders who do not sell their tokens yet. A virtual currency is not an asset. Accordingly, according to the current law, no tax is to be paid on profits earned from the transfer of virtual currencies.
However, in the US, cryptocurrencies are treated as capital assets. So, when a person transfers cryptocurrency at a profit, he/she is liable to pay tax depending on whether the assets are long-term or short-term crypto assets. The US law states that assets sold after one year of purchase are classified as long-term capital assets. So, if one buys a cryptocurrency for $1,000 and then sells it for $2,000 within one year of purchase – the gain is treated as long-term. If someone else bought the same cryptocurrency from that person after one year and sold it to buy something else, they are liable to pay capital gains tax.

I have a question: The person who purchased the cryptocurrency a year later is liable to pay capital gains tax, but might the person who bought it one year out be able to avoid paying capital gains tax?

Technically, yes. The person who purchased the cryptocurrency after a year would be liable to pay capital gains tax, assuming the property price had increased enough. For the gain to be considered long-term. If it’s not long-term enough, they wouldn’t be liable to pay capital gains tax.

The gains from the sale of capital assets are given a specific head in the Indian Tax Act. The Indian Income Tax Act provides for two categories of capital assets – “capital asset” and “non-capital asset.” There has been an increased focus on the valuation of these two categories in recent years. A detailed discussion is outside the scope of this article; in the case of a capital asset, section 58 of the Indian Income Tax Act provides that if a person sells a capital asset for an amount exceeding its cost or another basis (or any part thereof), he shall be liable to deduction of subtractions at the time of making any subsequent chargeable gain from such sale in respect of such capital asset.
Although there are conditions, the loss from an asset sale can be calculated and applied to that asset until its gain is used.
The loss you may incur on selling virtual digital assets cannot be carried over to future capital gains.
.Only those who incur a loss on the sale of virtual digital assets can carry forward tax losses from one year to the next, even if the losses are not adjusted. However, such a benefit is not available for crypto investors. Losses incurred by crypto investors cannot be carried forward to eight subsequent years to set off against capital gains but can only be for
Any unadjusted loss can be carried forward to eight subsequent years to offset future capital gains. However, this benefit is not available to crypto investors who incur a loss of more than $3,000 in a calendar year.
Taxation of gains from virtual digital assets Gains from the sale of virtual digital assets are treated as capital gains and will be taxed at the following rates: 15% for gains from virtual digital assets that are classified as personal property or assets that are used in a business or profession;33% for gains from virtual digital assets that are classified as capital property—new rules on the taxation of the sale of land and buildings. The new rules will apply to the sale of any real estate right, including land and buildings, which may be subject to a gain or loss. The sale of any real estate right, including land and buildings, will be subject to a gain or loss in the year of sale. Gains from the sale of real estate are generally taxed at the following rates: 15% for gains from personal property that are classified as capital property, 33% for gains from transactions that are not related to real estate, and 50% for gains from “farm” or “agricultural” property. The sale of a personal residence, including any attached land and buildings, is generally classified as a sale of personal property. Gains from the sale of a personal residence will be subject to taxation at 15% for gains from capital property.

Wallets -KYC

KYC is an acronym used for the “Know Your Customer” requirement that financial and non-financial organizations are mandated to follow. This includes requirements such as the identification of beneficial owners. KPIs in KYC compliance: Data, data quality, data completeness, data integrity – Risk assessment Financial organizations need to identify the people behind a company and their potential access to assets. They also need to be able to identify people who might be involved in illicit activities such as money laundering or terrorist financing. . -Know Your Customer- Data, data quality, data completeness, data integrity – Risk assessment – Know Your Customer- Data, data quality, data completeness, data integrity – Screening process KYC compliance is a mandatory duty that financial and non-financial organizations must follow. There are many reasons why KYC compliance is so substantial, such as to avoid the misuse of funds or to protect against money laundering. For example, if an individual were to use their personal information to create an account on a website that was not theirs, they would need
Non-financial companies like media organizations must have procedures that enable them to identify the authors of the content they produce. This can include verifying contributors’ identities and abilities using digital tools like biometrics or facial recognition software . Know Your Customer is an acronym for the “Know Your Customer” requirement that financial and non-financial organizations follow. This includes requirements such as the identification of beneficial owners.KPIs in KYC compliance: – Data, data quality, data completeness, data integrity – Risk assessment and risk assessment response – Data reporting and data updates – Decision making and adherence to policies – Legal compliance and regulatory compliance

Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an intergovernmental body established in 1989 to combat money laundering, terrorist financing, and other related threats against the integrity of the international financial system. The FATF was created in response to a need for a coordinated policy and action forum to address these issues globally. It developed a series of recommendations for member countries to adopt as part of their anti-money laundering laws.

The FATF is a key international organization that combats money laundering and terrorist financing. It was founded in 1989 by a meeting of the heads of state or government of the Group of Seven (G7) countries, France and Germany. And the European Community should tackle money laundering and terrorist financing. The founding members met again in 1990 to expand their number to include Canada, Italy, Japan, and the United Kingdom. The FATF identifies threats and recommends countermeasures that its members should adopt to combat them. A 25-member body, including representatives from each member state, oversees its mission. These countries are considered to be high-risk countries with strategic counter-terrorist financing programs. The FATF also has 12 other non-voting members, including the European Central Bank, Europol, and the OECD. In 1998, Norway became a member of FATF as an observing country; it later joined as a full member in 2004.

The FATF has thirty-two members, and the mutual evaluation process is generally 3-year. The FATF guidelines are designed to prevent money laundering and terrorist financing risk factors by identifying high-risk states. , as well as high-risk sectors. The Financial Action Task Force (FATF) was established in 1989 to combat money laundering, terrorist financing, and other related threats. The FATF has thirty-two members, and the mutual evaluation process is generally 3-year. The FATF guidelines are designed to prevent money laundering and terrorist financing risk factors by identifying.

Jurisdiction

Cryptocurrencies are an alternative to traditional currency. However, the legality of cryptocurrencies is still being discussed in many countries.
The United States Securities and Exchange Commission (SEC) has expressed concern over using cryptocurrencies as securities, meaning they can be regulated under securities laws. In addition, some countries have banned cryptocurrency trading altogether because it is unregulated and lacks transparency.

Some distributed blockchain networks operate on a transnational level, meaning they do not rely on any particular country or physical location. From a technical point of view, a nation’s borders are irrelevant to the operation of these networks because they do not gather personal information and thus cannot be restrained by such boundaries.
From a legal perspective, however, many jurisdictions are grappling with how to regulate blockchain-based networks. Certain countries have taken the approach of categorizing blockchains as “information goods” and treating them accordingly. Other countries view the technology as fundamentally different from information goods and have focused primarily on regulating financial transactions and privacy. For instance, the European Union
Blockchains have been hailed as the next disruptive technology. With its decentralized nature and transnational scope, distributed ledger technology can disrupt industries in a way not seen before. However, due to jurisdictional concerns, its revolutionary potential is limited.
Today, blockchain technology has just started to make waves in the world. Thanks to the many different industries that have used it, it has been met with great interest. With so many questions surrounding blockchain’s capabilities, governments face the challenge of regulating and restraining blockchains from becoming too powerful.