How can a government make people holding Bitcoin pay capital gains tax on their holdings if everyone is pseudonymous?
If crypto becomes widely adopted, will we have to rely more on sales taxes (e.g. at the point of sale), and less on wealth taxes?
1 Answer
This question seems borderline off-topic, as tax laws are localized to each country, but I think a generalized answer could be of interest nonetheless:
Bitcoin is money that grants the user of it full financial sovereignty. No third party needs to be involved for the user to hold, or use bitcoin. This means that there is the possibility of the user avoiding their tax liabilities.
However, this is not much different from cash, which is used to transact anonymously and without record, all around the world, every single day.
So I suspect that many jurisdictions will approach Bitcoin taxation in the same way that they do other things: voluntary reporting, with stiff penalties for those that make fraudulent claims.
