BITCOIN will be taxed following a dizzying year of price rises and falls, industry experts have warned as the volatile cryptocurrency continues moving towards the mainstream.
But experts have warned the cryptocurrency will not remain exempt from tax.
Benjamin Dives, CEO of London Block Exchange told Express.co.uk: “In this world, nothing can be said to be certain, except death and taxes. Cryptocurrency may be new and unique, but it is not exempt from tax liability.”
Mr Dives says individuals who profit from their Bitcoin investments will be required to pay capital gains tax - just like those who profit from the disposal of their stocks, shares and other investment instruments – through their annual self-assessment.
But could bitcoin become a tool for tax evasion?
Richard Asquith, vice president of global indirect tax at Avalar told Express.co.uk: “It almost certainly already is, with either large amounts of undeclared gains on the current bubble or money laundering.”
However, Mr Asquith adds the disadvantage for fraudsters is the bitcoin public ledger systems makes it possible for law authorities to track down most of the crimes and criminals.
So what fear is there for mass tax national tax evasion using bitcoin?
Daniele Bianchi, assistant professor of Finance at Warwick Business School, told Express.co.uk: “Other than the dark web, tax evasion and money laundering are the two main ways one could use Bitcoin to break the law.”
However, on Bitcoin becoming a major tool for tax evasion Mr Bianchi says it will be less and less appealing when it becomes a mainstream asset class, which is already happening.
He said: "Bitcoin can hide user’s identities but it is not fully anonymous. All other transaction details - such as time the transaction was made, amount sent and destination address - are recorded publicly on the blockchain and therefore all transfers made using Bitcoin can be traced back to specific wallet addresses.
“For this reason, Bitcoin is pseudonymous. This pseudonymity is appealing to users who value their privacy, but not enough for those who want to avoid taxes.”
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