Cryptocurrency and Taxation Challenges

Cryptocurrencies have lately been in the news because tax authorities claim that they can be used to launder money and evade taxes. Even the Supreme Court named a Special Investigating Committee on Black Money suggested that trading in such currency be prevented. While China has officially banned some of its biggest Bitcoin mining companies, countries such as have regulations in place view publisher site

Which is Crypto-monnaie?

Cryptocurrency, as the name suggests, uses encrypted codes to make a transaction, which are recognized by other computers in the user community. Instead of using paper money, ordinary bookkeeping entries update an online ledger. The buyer’s account is debited and the seller’s account is credited with that currency.

How Made on Cryptocurrency Transactions?

When a transaction is initiated by one user, her computer sends out a public cipher or public key that interacts with the private cipher of the person receiving the currency. If the receiver accepts the transaction, the initiating computer attaches a piece of code to a block of several such encrypted codes known to each user in the network.

For eg, BitCoin can also be used on mobile devices to enforce transactions. All you need to do is let the receiver check a QR code from an app on your smartphone or put it face to face utilizing Near Field Communication (NFC), which is very similar to common online wallets such as PayTM or MobiQuick.

Die-hard users swear by BitCoin for its decentralized nature, international acceptance, anonymity, transaction perpetuity and data security. Unlike paper currency, no central bank controls inflationary pressures on cryptocurrency. Transaction ledgers are stored in a Peer-to – Peer network , meaning that every computer chip in its computing power and copies of databases are stored on any such node.

How can Money Laundering be used for Cryptocurrency?

The very fact that there is no control over cryptocurrency transactions by central banks or tax authorities means that transactions can not always be tagged to a particular individual . This means that we don’t know whether the transactor has obtained the store of value legally or not.