Crypto Taxation Is Here. The Industry Should Welcome It

While hardcore crypto players seek nothing beyond extreme speculation and exciting price fluctuations in cryptocurrency prices – there is a new school of thought that is gaining impressive support. Glitzkoin belongs to this school, we are of the opinion that cryptocurrency, has a much wider and crucial role to play. We are in no way against crypto trading on the exchanges but, feel that the power and utility of crypto is immensely more. 

The focus needs to be on increasing crypto usage, real life cases where it could be used as a mode of payment. The 2020 pandemic was an excellent example of how, digital currency could bypass the shortcomings of the current banking systems. The health crisis developed, way too rapidly to actually implement substantial deployment of crypto payment infrastructure but, governments realized the benefits of this mode of payment. The concept of official (national) CBDC (Central Bank Digital Currency) also garnered robust support. 

Now the issue of crypto taxation is something that, many of us get apprehensive about. Having said that, it is important to take a more realistic view of the whole scenario. The objective is to make crypto more widely accepted as a mode of payment, something that will bring it closer to being used as ‘cash’. We often talk about reducing the gap between, conventional money and cryptocurrency. Well this is something that, is happening even as write this report. 

When talking about crypto getting nearly par or on par status, as conventional money, we arrive on the topic of taxation. Taxation is generally levied on income (less expenses). So crypto income would be taxable when, the selling price of a crypto is higher than the price at which it was purchased. Let’s leave the arithmetic aside for a moment, the issue is that you would ideally be taxed on the profit that you made from a crypto transaction. 

Talking about the usage of cryptocurrency to pay for a transaction and the corresponding, income that it generates to the receiver – let’s take a real life example from the United States. The authorities have identified several transactions where, real estate has been bought and sold with cryptocurrency serving as the mode of payment. The seller of the property received crypto for the sale. It does not take too much of thought to realize that the cryptocurrency received, amounted to an ‘income’ in the true sense of the term. The US has begun to take such transactions seriously, in terms of crypto taxation. This is just one example but in reality, any payment received in the form of cryptocurrency, would be construed as income – making it liable to cryptocurrency tax. 

It must be explained that the entire concept of cryptocurrency taxation is in its infancy. A few nations have started taxing crypto income, others are in the process of enacting related laws and yet others – have made no beginning at all. This is not something that can happen overnight. In our opinion, defining the parameters and procedures for taxing cryptocurrency, should be a combined effort by government agencies and the crypto industry. 

Let’s step back for a moment and understand, the positive impact of crypto taxation. There is a constant debate going on, the topic is – whether crypto is a currency. Fair to say that both sides have so far come up with convincing arguments. The moment we talk about taxation on cryptocurrency, it implies that the receipt of crypto or the profit from transacting crypto is indeed an income that can be taxed. This brings us closer to crypto being accepted as money. The IMF has gone to the extent of saying that, crypto is a type of ‘special’ currency. This will not mark a closure of the debate on crypto being a currency but, it does at least show that IMF, could not find another term to better describe their opinion on cryptocurrency. 

 

GLITZKOIN: A quick recap of the Glitzkoin project and the GTN crypto token.  The project was launched to improve the demand for natural diamonds and to enhance, the efficiency and productivity of the multibillion dollar industry. 

The DiaEx diamond trading platform was developed using Stellar blockchain resources. The GTN token was launched as part of the project and is designated, as the mode of payment on DiaEx. Promoted by second generation diamond veteran Navneet Goenka, Glitzkoin assigned a multifaceted role to the GTN token.  

The trading platform was completed in 2019 and was put through rigorous testing in early 2020. A team of diamond dealers subsequently did a pilot run on DiaEx with, actual transactions made on the platform.  This process was largely successful and revealed a few areas for improvement. The Glitzkoin tech team was handling the minor adjustment when, the pandemic and subsequent lockdowns slowed down the process. The management will reschedule the full launch of DiaEx once the health crisis eases. 

Talking about the multifaceted nature of the GTN token, the project is also focused on further increasing usage for the crypto – this aside from crypto exchange trade and the payment usage on the DiaEx platform. The concept is to have operators of various businesses, accept the GTN token as a mode of payment in their operations. Moving this idea forward Glitzkoin has confirmed a partnership with online ticketing giant Myticket.asia, wherein clients of the ticketing portal could use the GTN token as a mode of payment. Technical requirements for the integration of systems on both sides is at an advanced stage, nearing completion. Reviewing the challenges that the entertainment industry has been going through during the COVID pandemic, both managements have decided to set a launch schedule when the situation starts to normalize. The arrangement setup between Glitzkoin and Myticket.asia will form the blueprint, for similar deals to be negotiated with other business operators.  

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