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Bitcoin is decentralised and anonymous so how can governments issue /enforce taxes on any transactions made with bitcoin?

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    How did the government issue or enforce taxes in a cash based society? By investigating people who seem to have more than they report. – Pieter Wuille Jan 15 '17 at 22:45
  • very similar to bitcoin.stackexchange.com/questions/50699/… – Nick ODell Jan 15 '17 at 23:04
  • Yes, but we can't close as a duplicate unless one or the other gets an answer. – Murch Jan 15 '17 at 23:28
  • I guess the answer is we don't know. As If the answer is, they can't then I'm sure they will have to make it illegal or how will government and society function. – Aaron Jan 16 '17 at 0:07
  • The current IRS action is focused on transactions that earned money then were traded out for dollars, without declaring the capital gains. So it is not the BTC that is being taxed, it is the dollar increase. – SDsolar Jan 16 '17 at 23:00
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Governments can set up laws and regulations and then set up "departments" to monitor and enforce.

Whether it is successful or not is another question. No doubt they will have to skill up and understand how digital currencies really work, maybe monitor a few people, monitor the flow of their btc's and audit them, create some "high profile" cases to be made examples of etc.

One can draw an analogy with cash.

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Bitcoin is (...) anonymous

You won't go to the governmental office to say you have created a wallet. But they have huge control over your ISP probably and can check what are you send/receive to/from Internet...

  • VPN would "solve" this. – José Mendes Jan 18 '17 at 13:55
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The government wants you to convert back in the future, then pay taxes on capital gains and sales that follow.

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