Post by account_disabled on Mar 6, 2024 22:19:56 GMT -5
Some people believe that because of the existence of digital assets, authorities have a harder time going after people who use cryptocurrencies to hide their income.
However, the truth is that blockchain technology creates a transparent and detailed record of your transactions, making it a terrible way to hide any financial activity.
In fact, tax authorities proactively monitor, fine and persecute those individuals and legal entities who intend to use cryptocurrencies to evade taxes.
At Binance, we believe compliance with tax laws is essential to achieving mass adoption and overall legitimacy of the entire Web3 and cryptocurrency ecosystem.
Blockchain is still a relatively new technology, so there are endless lies and false myths related to cryptocurrencies. Our goal is to analyze some of the most common narratives that promote FUD (fear, uncertainty and doubt) in the cryptocurrency sector and separate fact from fiction.
That's why we strive to improve the general understanding of blockchain and cryptocurrencies by making Web3 training accessible to everyone. Despite the enthusiasm surrounding this topic, many people have only superficial or virtually no knowledge about it, leading to many misconceptions and false beliefs.
And, while some of these misconceptions Ecuador Mobile Number List may be harmless, others can sow fear and uncertainty, making people mistrust digital assets for no reason. For this reason, at Binance we have set out to identify and dismantle the most common myths to promote training in cryptocurrencies. Although the cryptocurrency ecosystem is not perfect and research and critical thinking are necessary, that research should be based on a good understanding of the basics and not on popular myths and common fallacies.
Myth: Cryptocurrencies are a means to evade taxes
The decentralized nature of cryptocurrencies means that these assets can operate outside the control of a central authority, such as a government or bank. However, while this feature may offer advantages such as increased security, it also creates a misconception that it creates a loophole for tax evaders.
Transactions made with cryptocurrency are recorded on a public ledger, but user identities remain (somewhat) anonymous. And so the argument goes, this anonymity makes it harder for tax authorities to go after people who use cryptocurrencies to hide their income or assets. In line with this myth, in 2021 the CNBC channel even published an article with the headline: "Cryptocurrencies represent a significant risk of tax evasion."
Reality: the blockchain is the definitive paper trail
The reality, however, is very different. Blockchain networks are designed as visible, accessible and publicly available digital ledgers of cryptocurrency transactions. Transaction records are inherently transparent and immutable. Compared to traditional financial services, where tax havens are easily established through offshore bank accounts and complex corporate structures.
Anyone at any time can examine the entire blockchain code base using a block explorer, which is a web tool that allows you to see, among other data, all transactions made and their associated addresses. At the intersection of computer science, economics, and forensics lies a new type of research discipline (sometimes called “blockchain analysis”). This emerging field allows tracking financial activity across various transactions to specifically pseudonymous and public blockchain addresses, and from there linking those addresses to the user's true identity through their IP address and exchange accounts, among others.
A persistent misconception is that cryptocurrencies are primarily used to evade taxes when, in fact, blockchain technology creates a transparent and detailed record of your transactions, making it one of the worst ways to hide financial activity from the government. .
Get tough on tax evasion
In the United States, the Internal Revenue Service (IRS) has issued guidance on the tax treatment of cryptocurrencies and has stepped up its enforcement efforts. Similarly, other countries are also taking steps to regulate cryptocurrencies and prevent their use for illicit activities. The resources and enforcement capabilities of tax authorities vary significantly around the world, but in the coming years we will undoubtedly see a large increase in audits within the chain. As transactions are permanent in the blockchain's public ledgers, tax inspectors will be able to look back at any illegal or unreported transactions in previous years.
The IRS Cybercrime Unit is a five-year-old department that belongs to the largest Criminal Investigation section and the authority that has driven the tax agency's cryptocurrency crime investigations. In addition, this unit is an important client of one of the most important blockchain analysis companies in the world: Chainalysis. Together, they proactively monitor, fine, and prosecute those who seek to use cryptocurrencies to evade their tax obligations.