A lot has been written for example, “The Best Way To Become Rich Is By Trading Using This Cryptocurrency” by http://cryptocurry.com and many others to the extent that it has now become the talking point on social media and at countless social gatherings. Many sees this as a get-rich-quick opportunity without understanding the features, risks and actual workings of crypto currencies. Few are able to resist the urge to engage in this crypto market when they hear about it.
This type of market behaviour is pure madness, “every Tom, Dick and Harry” are getting into crypto currencies and the market is rewarding them with vast digital profits. When it comes to money and investing, we’re not always as rational as we think we are – which is why there’s a whole field of study that explains our sometimes strange, behaviour. The truth is, there remains a level of mystique surrounding the digital currencies and that adds to the excitement that surrounds it.
It is considered by the Organisation for Economic Cooperation and Development (OECD) that the likely reason why crypto currencies are “taking off” in acceptability as a means of payment, is due to the anonymity feature. The main innovation of crypto currencies is the feature of trust-less transactions (the ability to avoid the need for a trusted third party).
The unfortunate reality is that the high degree of anonymity feature has great advantages for illegal activities such as money laundering, avoiding financial regulations, terrorist financing and evading of taxes.
Bitcoin reported in December 2017 that the South African Revenue Service (SARS) is working on ways to ensure it gets its cut from all the action. SARS is reportedly in talks with leading international technology companies to find an efficient method to track crypto currency trading, for taxation purposes.
Dr Randall Carolissen, SARS group executive for research, said: “As you can imagine it is very difficult – the blockchain technology. Without revealing too much – we are talking to some of the top technology companies in the world that are doing similar work for Canada and the UK and we are hoping to get that technology.” He added that the authority is also solidifying its connection with the South African Reserve Bank, to see how they can better match cross-border outflows and inflows of money to try and make sure people have less “room to hide things.”
He explained that, “At the moment, we are treating crypto currency in the same way as capital realisation – so in other words, it is like a Krugerrand. If you buy it at a particular point and you then sell it, you will be faced with a capital appreciation and then we will apply Capital Gains Tax.” SARS is furthermore, working with similar agencies from different countries on implementing new policies for tackling the issue via the OECD. This collaboration is said to provide them with detailed recommendations for handling crypto currencies.
The fact of the matter is, whether you already have your life savings invested in Bitcoin and other currencies or considering whether to start riding this crypto band wagon, … Big Brother may be watching you.
I’m not arguing for or against an investment in crypto currencies, but will you be prepared in future to pay your taxes to SARS with Bitcoin, Ripple, Tron, NEO or XLM?