Want to tax cryptocurrencies? Encourage crypto payments!

Written by Joe Parkin

Joe is COO of FCF Pay, an experienced entrepreneur and is passionate about using blockchain technology to make the global economy more inclusive and fair.

Ok, Governments… Let’s talk straight! 

We all know that one of the reasons a lot of you guys are pushing back against cryptocurrencies is that you are concerned about everyday folks partaking in money laundering; a pursuit generally reserved for the rich and powerful.

There are also murmurings about avoiding the funding of terrorism, but I’m confident a lot of us have already grown tired of this excuse for the constantly expanding Orwellian interest that the authorities have in our everyday lives.

This article won’t go into the many ways in which control over the money supply helps to keep the political and banking class in power. To be honest, I happen to believe that even the majority of bankers and politicians are not fully aware of the mechanics of the system and are simply “doing their jobs” or adhering to the status quo that they’ve grown accustomed to in their family and social bubbles.

So, what’s the real overwhelming reason you’re not embracing cryptocurrencies just yet? In a word, TAX.

So, what are you worried about?

The advent of digital payments has been an absolute godsend for the taxman. With the vast majority of transactions going via our cards and bank accounts, which are now open books for the powers that be to peruse at will, administrations are able to set up algorithms to trigger alarms if anyone appears to be becoming more prosperous than they are admitting to, with inspections, threatening letters and so on being sent out more efficiently than ever (to individuals and small businesses, at least). 

Cash, on the other hand, is incredibly inconvenient when it comes to charging income tax. If Bob pays María €50 cash for a haircut in his living room, and María doesn’t include that in her tax return, well… Horror of horrors, María isn’t getting taxed! Even worse, she can go and buy stuff with that cash and the administration’s algorithms won’t even know!

But wait! It’s not all bad news. When María goes to the supermarket to buy some guilt-laden Friday evening oven pizza and beers, that cash payment is registered in the checkout and… happy days! In most countries, some sort of sales tax is applied and the supermarket pays tax on the profit also. At least they will in theory.

Cryptocurrencies are Digital Cash

At FCF Pay, we very often discuss the fact that cryptocurrencies are very much like a digital form of cash. Blockchain technology allows for the transfer of a single unique copy of a digital asset from one person to another in much the same way as one passes physical currency from hand to hand.

So, when Bob sends €50 in Bitcoin to María for a haircut, this is not being registered by the banks and public administrations BUT… María now has €50 to spend.

Just as with cash, the way to ensure that money flows through the system, with yummy taxes being skimmed at every step, is to encourage companies to accept crypto payments. Emphasis on the word ENCOURAGE!

If a company uses FCF Pay to take payments, every transaction is registered, associated with an order that is expressed in fiat value. Taxation and accounting are made simpler than it is with cash payments.

Global Digital Cash Economy

Now, Government friends, let’s not think so small.

The fiat cash economy is limited in terms of speed, efficiency and geographical reach. What we have now, though, is a kind of cash that knows no borders. Cryptocurrencies are already revolutionising the way people transact with one another worldwide. With crypto payments it makes no difference if the person you are paying is in the next town or if you’re on the opposite side of the world.

This comes at the same time as an exponential increase in the people working online, even more so after Covid.

Crypto is the cash of the internet.

As the people in charge of improving the economy of these “countries” that you profess such dedication to, why would you not do your best to ensure that the flow of funds from this global digital cash economy concentrate in your corner of the planet, adding to the wellbeing of the citizens that vote for you to keep your jobs?

Refusal to embrace such a revolutionary new way to allow wealth to flow into your local economy, to me, can only mean one of two things:

  1. You don’t understand it
  2. You have other priorities

If case 1 is the issue, please reach out and I will be delighted to brainstorm it out with you. If the case is the latter, you should honestly be ashamed of yourselves.

Ignorance can be remedied with education and communication. Selfish interests, however, should not be tolerated from people in public offices.

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3 Comments

  1. Mike

    Very well said. Instead of being anti-crypto, the smart governments out there should embrace it for profit. But it’s scary to have a new system where you can’t control what people have in their wallets i guess. I think we’ll get there in due time.

    Reply
    • joe

      Only 2 things are required for governments to embrace crypto:

      1) Putting the people and the economy above personal or party political interests
      2) Educating themselves about the benefits of the technology

      These are bigger challenges than they should be, sadly.

      Reply
  2. Jay Kay

    Excellent as usual Joe. Very informative.

    Those that don’t embrace crypto are going to be left behind.

    Reply

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