Major countries around the world have either already implemented a regulatory framework for cryptocurrencies, or are in the process of doing so. Therefore, many traders are asking the question as to what exactly pushes these countries to rush such legislation? What are the primary reasons that governments are so desperate about bringing cryptos into the fold?
Additional tax income
At this point, a little over 20% of the world’s countries have introduced a regulatory framework for cryptocurrencies. Pretty much every country requires these companies to register to start their operations, the regulation just adds another step to that. Crypto companies require a license from the local financial regulator to initiate their business plan.
Usually, the license comes at a cost, which is even more funds going to the country, but most crypto companies are willing to pay. Later, the company is forced to adhere to local laws, for example, restrictions on financial asset ads, or restrictions on account sizes. Every country comes with its own version of rules.
However, one of the primary feature governments are after with their regulation is the customer activity logs from the companies. Through this data, the local Tax Agency will be able to track and tax crypto traders accordingly. In a grey zone environment, the crypto companies are not forced by law to disclose this information, therefore if the government asks them for it, they can simply decline.
Governments basically amplify the amount of tax they can squeeze out of the industry. Not only do they tax the companies, but the customers as well.
This may seem unfair, but in all honesty, it is no. The profit is considered as income, and if a citizen is already obliged to pay anywhere from 10 to 40% as tax,