PayPal and Coinbase have their solution - Inspired Traveler

Bitcoin, Ethereum, and all of the cryptocurrencies and tokens available on the market, will have to cross several obstacles that will stand in their way. If the first concerns the battle of certain states to want to retain their monetary sovereignty, a second will concern customers directly, and their ability to comply with tax quickly and easily.

For now, the alignment of the planets is benefiting the rise of digital currencies and Bitcoin continues to grow (despite the recent correction, from $ 40,000 to $ 30,000). Coinbase and PayPal, which both offer to buy and store cryptos on their platform, took advantage of their Olympic form to imagine the sequel and invest in a strategic startup.

On January 7, they both chose to participate in a roundtable for the American startup TaxBit, specializing in the automation of tasks related to the tax compliance of digital assets.

The amount injected by PayPal and Coinbase Venture into the startup was not indicated. For TaxBit, this investment in the company will reinforce an important point in the adoption of crypto-currencies, while the authorities will be increasingly sensitive on the subject. More and more individuals and professionals own large sums of digital currencies, and each country will in its own way regulate foreign exchange transactions in fiat currency.

Discover our guide here on how to declare your cryptocurrencies for tax in 2021.

Tax on cryptocurrencies

In 2019, pressure from the authorities had already started in the United States. L’Internal Revenue Service (IRS), the U.S. tax collector, had informed cryptocurrency holders that they should consider reporting their assets to the government. Since then, it is certain that the organization has prepared itself for a crackdown on uncontrolled gains, and is strengthening its intransigence.

In an article published by the site Law360, a former official of the IRS spoke of the shifting into high gear of the American tax branch. If the agency had a conduct “Educational” against owners of crypto-currencies in the past, it will be tougher in 2021. “IRS has not positioned itself for a smooth transition from education to application in 2021 and beyond” he said in an article. The man was preparing for a new trend:

“Even though the IRS has yet to announce numerous cases of tax evasion or money laundering involving virtual currency, this trend is expected to change in 2021.”

For Coinbase, the main crypto purchasing and storage platform to date (30 million customers), this tightening of the rules will make sense when in 2018 the platform was forced to exclude its service to 13,000 customers. which were not in order fiscally.

TaxBit operates in the United States, but intends to expand internationally. Its solution for automating these taxation rules, whether for the customer, the purchasing platform and the payment service, could very soon be deployed in the United Kingdom, Canada and Australia.

Coinbase and Paypal working internationally and particularly in Europe as in France, it is likely that the legal urgency orders them to quickly offer solutions and warnings. Otherwise, the problem could certainly go far beyond “only” 13,000 customers.