CGT

Podsly

True, but tax evasion does. And for crypto like foreX where all transactions are CGT events, that is by definition avoiding the tax unless they show the tax department the transactions thus nullifying the use of Tornado Cash.

Fragrant_Strain2023

Best way to do it anyway bro, avoid that CGT. This is exactly what the richest people in the world do 🤜👌

Hot_Philosopher3199

It was held in self storage through a self directed IRA. Now it gets unwound to a Traditional IRA through Fidelity. No CGT

Makunouchiipp0

So you’re hitting yourself with a CGT event? You know in kind (both ways) is a thing? And if it’s not yet available in your country it won’t be too far away

StealthExplorer

I would investigate Strike. Have used them, easy-peasy. Just make sure you connect with Revolut or Monzo accounts or you are at risk of your bank account being frozen, or at the least opening up a can of worms. Remember too to keep all details of the transaction as you are most likely liable for CGT when/if you dispose of the bitcoin.

Aussiehash

You would need to talk to your accountant about CGT liabilities to the ATO, even if you intend to permanently migrate overseas. You might also have to pay land tax if you have an Aussie home that is not your principal residence.

forest-moth

Sell the Bitcoin on an exchange or to someone wanting your coins and pay the owing CGT What’s the question?

Dettol-tasting-menu

Well done and congrats! Bitcoin in your cold wallet is freedom bitcoin, while bitcoin in your IBIT custodian (Coinbase) account is locked up bitcoin. You’re right if you want to free your jail cell coin you will have to 1) sell your IBIT, 2) wait for settlement and take profit (if any), 3) set aside CGT amount (ouch), 4) send cash from ETF broker account to bitcoin exchange, 5) wait for exchange deposit process, and then finally 6) buy real bitcoin. Since it needs to go through the whole tradfi banking process, it could take days, and market could move significantly during the fiat transit, and the CGT will eat into your total stack too. That’s the price to pay for the “convenience” of ETF. If I were in your shoes I would just leave the IBIT untouched, but only stack real sats from now on. Once the sats get locked up in ETF the effort required to free them again is high and often not worth the trouble, better stay away from ETF from the beginning, provided that you have the technical capacity of self custodying. You have definitely made the right decision of buying real bitcoin, let’s stack real sats from now on. Good luck!

whaleofathyme

What is the CGT you’ll have to pay on that? What level does BTC need to be so if you buy in you’ll break even?

Wunid

Your descendants inherit the BTC and debt and continue doing the same thing. This isn't really new. Wealthy people do this in the regular market, bypassing CGT. They also get much better loan terms, so their assets don't have to grow as quickly.

Hit4Help

So then you die and your estate needs to pay off the debts still. Looks like that would avoid the CGT, but makes an already complex situation even more complex.

Hit4Help

I've been trying to work this through in my head. Assuming you have 1BTC worth 1m. Taking a very conversitive 10% loan against the BTC collateral would give 100K. While this could be a couple year living for some, you would still have an interest rate of say 6% to pay back. Either you take that money to put into traditional money earners like stocks or property, but right now the lending rates seem to be lower than any interest you could get. How do you factor paying back the loan? If you want to use the BTC to service the loan then you need to pay the CGT.

Ok_Score9113

If you are paying CGT that means you’ve made profit, so what’s the issue? You could apply this to any asset outside of a tax sheltered account

Wiggly-Pig

An Australian company is about to do this for home loans. 60% LvR for BTC and about 9% interest from what I saw. So still terrible compared to traditional mortgages, but you don't need to sell (and therefore incur CGT) plus it will start competition in that market that will bring interest rates down

theabominablewonder

If you want to avoid CGT in the short term then use your ETH as collateral for a stablecoin loan and then cash out the stablecoins. If you want to cash out entirely then just pay the tax. Crypto is traceable on the blockchain and ATMs in europe will require you to verify your ID so the transactions could be linked back to you at some point and then you will face potential fines/interest on the tax you were trying to avoid.

Phfat_John

On the face of it, this just sounds like a scheme for tax avoidance rather than being a legitimate tax minimisation strategy. So can potentially get caught under Part IVA of the ITAA 1936. What is the point of doing this? You will probably have to pay more in fees, conversion rate is probably worse than converting to fiat on an exchange. So while you're capital gain is reduced, you lose out overall because you've made less of a gain. Potentially legitimate to avoid foreign conversion costs if you were to change AUD into EUR for the trip costs. But your concern about visibility of crypto transactions with the ATO makes it seem like you're trying to hide the value of a potential CGT event and the actual event itself to avoid the tax.

Kenbarlow78

Don’t panic if there’s a slump in value between now and 2027. We’re coming to the end of Bitcoin season (bitcoin dominance is down below 60% now). People say there’ll be another surge first, but I’m expecting a significant pullback soon, while people focus on ETH and the mystical and elusive alt coin season. 2026 will be like winter for Bitcoin. I’ll start buying again in mid-late 2026 and through 2027, in advance of the 2028 halving. Expecting the big surge for my Bitcoin portfolio to come in 2029. I’m not selling my Bitcoin pre slump for a couple of reasons, if you’re wondering. 1) this cycle has been a little different what with recent introductions of framework and legislation, so maybe the drop doesn’t happen and Bitcoin enters a golden stretch of mass adoption 🤷‍♂️ 2) I live in Ireland, so selling/swapping my position trigger a 33% CGT obligation. 3) Quite simply, I believe Bitcoin will continue to trend up in value. Over the next five years it could pass the million mark. Ten years from now, who knows? Good luck with your investments and if you’re looking for a relatively safe crypto to invest in that’s likely to achieve gains in the near future, maybe have a look at some of the top altcoin like ETH, ADA, RENDER, XRP, SUI. Solana is popular too, but is already running on a high. I’d avoid it for now… Good look with your investments.

polymath_uk

What capital gain are you making? You bought BTC at $100,000 and moments later sold it for $100,001. The CGT is 20% of $1 = 20 cents. If you sold at $99,999 you could offset the $1 loss against other gains surely?

Best-Click8583

Big hug for seeing your dog over the rainbow highway, those are some of the hardest times. Yup that’s my boarder collie and his sister (aussi shepherd) is somewhere in the corn fields. What is CGT? 

Tmilkandtwo

Is that a border collie? Way to go using bitcoin to fund you and your dog's dream. I lost my 14 ½ year old dog and my heart last month. I hope CGT isn't too steep where you are

VeryThicknLong

Is this on top of CGT?!?

Cubehagain

The UK want you to pay CGT tax on an asset they have no belief in.

Interesting_Loss_907

Wait…what? Why would you sell & pay CGT just to move coins from one wallet to another. I don’t use RH personally so idk, but are telling me RH does not allow users to send BTC? If so, that’s **terrible** service & in that case I’m glad I never used them. With every other wallet, even custodial wallets like coinbase, kraken, cashapp etc, you can just send directly to any BTC address you want. You do **not** normally have to cash out to usd (creating CGT liability) to re-buy & move to another wallet.

NeoG_

CGT calculation in Australia is sell price -(purchase + fees) = capital gain/loss The capital gain is added to your income for that financial year. If you have owned the asset for more than 12 months you add half of the capital gain to your income.

Bred_Slippy

Don't forget your company is a separate entity to you. In order to change the ownership of your personal BTC to your company, the transfer would be considered a taxable event (for CGT). Also, bear in mind the BTC within the company will be classed as an intangible asset and any profits will be subject to corporation tax. From a tax POV, it would likely be better to hold a spot ETF within an ISA or SIPP, than putting it in the company. 

Dettol-tasting-menu

But you see that’s the problem. Say you bought some ETF and it went up in price significantly after a few years, then you want to try self custody, you likely won’t go ahead because you will then have to sell your ETF, take profit, pay CGT on the profit, and then buy bitcoin with your post-tax money. You will simply get less bitcoin that way so you won’t do it. Bitcoin is valuable because it is a permisionless and decentralised asset, bitcoin locked up in a ETF custody doesn’t make it valuable. If everyone does that then bitcoin dies. It’d be much better for everyone to start by holding bitcoin themselves. If it’s in a retirement fund with substantial tax benefits, then sure go ETF for that portion, but apart from that tax scenario most people should self custody. It’s not difficult and many products on market make it super simple.

pyravex

All I'm saying is instead of 'complying' and putting up with absurdly high CGT, move somewhere where you don't need to pay. I used to live in Austria, and was paying 27% CGT. I got fed up with it and moved to Switzerland. Now paying 0%.

HippycrackJack

Not when you have to track cost basis and pay CGT on every transaction it isn't. In such a scenario, its use case is storing wealth and avoiding debasement. Sorry that doesn't fit your narrative.

btc6000

Have a look at navexa, their portfolio tracker can calculate CGT using different strategies and produce tax reports for you

Due-Candy-8929

Tempted to withdraw profits to fiat to throw it into HYSA’s - as soon as I sell anything it triggers CGT anyway so not much appeal in stable coins to me :/

warmans

In most countries surely you'd get taxed twice getting paid in bitcoin. The company probably pays taxes from your salary, buys the bitcoin to pay you then you pay CGT on withdrawals (or at least need to calculate them). Sounds like a massive administrative overhead for very little benefit (considering you could just buy the bitcoin yourself).

Naive_Carpenter7321

Cars depreciate quickly, Bitcoin could go down as well as up during the course of any loan. My recommendation would be to sell some Bitcoin and top back up as if repaying a loan. The CGT will get involved at some point anyway unless he's a lifetime hoarder. If Bitcoiners want Bitcoin to be money, surely it has to be used like money.

dm_sufc

is this 100% correct regarding bank transfers? Nobody has had a definitive answer. Someone said they spoke to Barclays and they said it's ANY crypto transaction. My query is what if someone struck gold and wanted to cash out £500k, and had to pay £120,000 CGT on that, Barclays restricting withdrawals to £10k means you'd need to say oh hold on mr taxman I cant get you that money yet.

Kangaroo-dollars

Make sure you read up on capital gains tax in whatever country you're in. In my country (Australia), we get a 50% CGT discount if you hold anything for more than 12 months before selling it for a profit. Since I bought crypto in October last year, I won't sell any of it until the 12 months has passed. In addition to that: many investors far more knowledgeable than myself have speculated that bitcoin is likely to continue rising until at least Oct/Nov this year, at a minimum. So you wouldn't want to sell any of it before then, regardless of CGT.

Born-Ad4452

Firstly - there is the capital gains tax management part. You need to record and manage all that, and recover all that value just to stand still. Not sure where you are based but if you had to pay for example 20% CGT, then a dip of at least that will be essential.

metamorphosis

It all depends on profit, your income bracket etc . In Australia is similar. If you hold an asset for < 12 months it's 100% taxable. So if you are a high income server and let's say your CGT on crypto is 200k. You'll effectively will pay 100K in taxes . If you hold for 12+ months you'll pay 50k. So 50k is big money, but holding can be risky..... however your bag needs to drop 25%+ for you to be in negative

Chewbakka-Wakka

Being 19, you can afford to buy and hold - you may find yourself in this for life. "a couple hundred a week" - If you can invest 10K - 20K now then sure, can done by holding where value goes up by a few percent then you would gain a few hundred. Otherwise if trying to buy and sell to make that with a low amount, I'd advise caution. You must also check if taxable per trade. May need to pay CGT and all trades can be taxable events. Buy and hold is simplest, and safest option. Stick to like top 50 coins by market cap for safe stable bet. ADA is a solid option now. ( this is IMO )

kipha01

I just use a combo of Koinly free, will pay when I need to deal with CGT, and coingecko, also free.

Mental-Health-Crisis

In Germany no CGT after 10 years of ownership and if you lived on the land yourself for two consecutive years no CGT either. All profits are yours. CGT 25% flat when you sell before the 10 years are up. Very favourable conditions. Same with bitcoin, hold it one year minimum and all the profits would be yours if you sell - no CGT. I don't know where the OP is located though.

Interesting_Loss_907

I agree 100% that they’ll always know when you sell & take capital gains if you’re using an exchange (and I do). For larger amounts it would be very difficult to avoid kyc & you’re far better off just reporting it, assuming they know anyway, & paying your CGT. But that was not the topic above. The question was do they know how many you are holding. And into that, I think the answer is no. But thankfully, in the US that’s not a concern anyway, as we are not obligated to report those holdings. We are only obligated to report when we spend or sell it for capital gains.

conkersdeep10

It’s pretty easy tbh mate. Set up a Kraken Pro account, do the required KYC stuff they are obliged to ask for by the FCA. Transfer money into KP from your current account. Buy BTC. Move it off KP to your wallet. As you’re in the UK I’d advise keeping track of things using ‘Koinly’ (free version) or something similar, just to keep track of your CGT when you sell.

Fit_Put_5648

I hope she is will pay CGT

mikkeltaylor1

This , but wait until it’s more established and you don’t have to incur CGT

ConversationNice6589

Unless you are lucky enough to live in a CGT haven like the UAE then yes you have to report it. I’ve pondered not reporting but truth is they find out and then it’s game over.

Own-Helicopter-5558

I was just researching very thing because I have been thinking about my kids junior stocks ISAs and the lack of return they have had from S&P500 compared to my BTC. There is no actual law in the UK stating a minor cannot own BTC, they just have no on and off ramp until they're 18. You can buy them a wallet and buy BTC for them. You will be technically disposing of the BTC if you buy it and immediately transfer it to their wallet so in theory you can buy up to £3000/year on their behalf and not be over the capitol gains threshold. So you could do this all throughout the bear market when you are not making any on capitol gains on your own BTC. Or if you are stacking yourself for the long term you could buy your kids BTC for years and stop when you want to sell some of your own assets. Your wife could do the same with her capitol gains allowance so 2 kids investing £3000/year each with no tax implication on your part. Whenever I have looked at the capitol gains aspect on my self assessment, they are only interested in seeing details of capitol gains over the threshold so I doubt you would have to give details (but research that part specifically if you don't already do self assessment). However, the kids will have paid £0 for their BTC so when they go to sell it for a house in 20 years, they will have to pay CGT on 100% of their bags (a small price for having a house deposit at 23). I am of the opinion that in 15-20 years time when my kids need to buy houses. I will be able to custody a portion my BTC with the lender and they will be able to have a fully BTC backed interest only mortgage and they will be building equity while paying only £150-£300/month in interest payments, leaving them with enough surplus income to make their own investments and won't feel they have to wait until they're in their 30s to have kids, then every 5 years when they need to rearrange the mortgage, the amount of BTC required for collateral will reduce and I will be able to quietly draw down on the rest for my pension, and all that could be done with as little as 1 BTC.

cliftonianbristol

I’m awed that you cannot consider its CGT? Almost half is gone to dear state

Many_Revenue_6928

It's 24%, but yes sure. I pay CGT on all my investment gains. Not sure why crypto should be any different. I'm happy to contribute to the society I live in and benefit from.

Mental-Health-Crisis

Garbage. If you're clueless don't parade it. Bitcoin was already declared "private money" in 2013 aka "unit of account" years and years before anyone even acknowledged bitcoin as an asset: [https://www.cnbc.com/2013/08/19/bitcoin-recognized-by-germany-as-private-money.html](https://www.cnbc.com/2013/08/19/bitcoin-recognized-by-germany-as-private-money.html) Besides there are numerous EU laws like MiCA protecting digital asset holders and regualting service providers. My 20x since buying are CGT free.

Elendron

Interesting point. Wouldn't they need to wait until one year has passed to fairly conclude that CGT returns has dropped though? I suppose they can compare month on month. Perhaps they'll reduce in October then :>

Silver_Archer_7527

The CGT returns dropped since the last rise. Laffer curve has been hit.

BlackDog990

>Under Australian law every single disposal is considered a CGT event which requires record keeping by law. This means if you buy a $5 coffee you have to record the date, time, price of btc on the day, price of btc when you first acquired that btc, the accounting method (e.g. first in first out), what the transaction was for, the transaction ID, the recipients bitcoin address. This is all mostly true under US law as well. Doesnt stop us? 🤷‍♂️ >Australia does not have any carve out for diminimus use Neither does US. >they only have what is called a personal use asset exemption which refers to the exemption of record keeping if you purchase a specific amount of bitcoin to use it straight away (effectively within one week) to buy something that is for sale in bitcoin. That's awesome! Nothing like that in US. >Compare this to Singapore They are great, but a bit of a unicorn. Not many countries have what youre looking for. All this is to say, while I agree the banks are outta line telling you what you can/cant do with your money the examples you provided arent really any different than the US or some other big players.

slvbtc

CGT makes bitcoin an unviable payment method because of record keeping burden. Under Australian law every single disposal is considered a CGT event which requires record keeping by law. This means if you buy a $5 coffee you have to record the date, time, price of btc on the day, price of btc when you first acquired that btc, the accounting method (e.g. first in first out), what the transaction was for, the transaction ID, the recipients bitcoin address. Then you need to calulate the capital gain or loss and then keep those records for 8 years in case you are audited. This is for every single transaction even a coffee. It doesnt matter if there was a capital gain or a capital loss you still need to keep these records by law. Australia does not have any carve out for diminimus use exemptions for example "transactions under $500 are exempt from CGT", they only have what is called a personal use asset exemption which refers to the exemption of record keeping if you purchase a specific amount of bitcoin to use it straight away (effectively within one week) to buy something that is for sale in bitcoin. This record keeping burden makes it impossible to use bitcoin as a daily payments method for any bitcoin held by an individual for more than one week. Compare this to Singapore for example where there is zero CGT meaning if you use bitcoin to buy a coffee there is no record keeping burden imposed, allowing bitcoin to be frictionlessly used in commerce. Australia is anti bitcoin.

NeoG_

I don't understand how CGT makes it not viable as a payment method, can you explain?

Amber_Sam

>reduce CGT That's my problem. Reducing doesn't mean eliminating. Bitcoin is money, there should be no tax on it.

Dark_Raiden_

Keep it in a non KYC exchange or wallet, swap it to tether and the claim 50% discount CGT when u sell it after a year.

Extreme-Respect-4966

This should be upvoted as I can imagine others confusing income tax rates with CGT.

Difficult-Set-3151

24% CGT is still significantly less tax than what people working for their money have to pay.

user_name_checks_out

> Reform are bound to reduce CGT. They don't have a snowball's chance in hell of winning a majority

Own-Helicopter-5558

Imagine you had BTC worth $1,000,000 and you used 25% of it as collateral on an interest only mortgage for a $250k house. You will only be paying the mortgage interest payments on the mortgage. 5 years later you refinance, your BTC is worth $2,000,000 and your house is worth $275,000 so you will not have to put as much BTC down as collateral. You haven't sold the BTC so you should not pay CGT on it, but you will probably have to custody it with the lender during the term of the mortgage. Effectively you get home ownership with very low monthly payments.

Own-Helicopter-5558

24% CGT is just theft. Hodl for another cycle until the commies are out in 2029. Reform are bound to reduce CGT. Personally I am planning to hodl until my kids need housing, by this time I am pretty sure we will be able to use BTC as collateral against an interest only mortgage. If not then we will truly be living in a backwater hell hole and we will have emigrated.

Fluid_Garden8512

I have already lodged my return and what was a massive help was [Koinly](https://koinly.io/?via=B9E95F79&utm_source=friend) which has been tracking all my cost basis for every single transaction I have ever made since 2017, that made my life easy in terms of working our CGT. The thing pulls all your transactions using APIs from all your exchanges, and creates tax reports for you. I like it so much that I have two accounts - one for my personal stash and one from my retirement account to keep tabs of everything.

TheMajesticPrincess

CGT is capital gains tax, which is what you pay if you own something and the price goes up and you sell it for a profit (applies to stocks, housing, crypto etc). If you have been trading memecoins you'll likely need to look back at your entire transaction history and work out if in any of the years you've made more than £3,000 between two Aprils.

Vorzak0n3

What is mean CGT ? Well I trade memecoins ...

TheMajesticPrincess

If you've only lost money theoretically you shouldn't owe CGT. Depends if you sold or not. If you haven't sold anything ever you shouldn't owe CGT. CGT only happens if you trade currencies. If you've made less than (I believe £3K) you also shouldn't owe CGT. (This is the boat I'm in)

cooltone

Buy/Sell in GDP Track in USD. Capital Gains Tax is the thorny issue here, it's an odd tax construction that is important to understand. Your Bitcoin is treated as one pile irrespective of how many wallets and exchanges it's spread across. You maintain and record the value of bitcoin in your pile. Each time you add or subtract some bitcoin you will recalculate the value of your pile. Capital Gains is the market value minus the pile value for the amount of bitcoin you sell. This means you will need to record all your bitcoin transactions for long as you hold any bitcoin. The unit of account for CGT is GBP. If you buy in USD you must record the GDP/USD or something to verify the exchange rate otherwise it would not be possible to determine the CGT. This will painful for you and HMRC. There is an abundance of tracking information in USD, just bear in mind the exchange rates fluctuate.

Leithm

If you did your exchanges through major exchanges like Coinbase or Kraken, you can link al of these to Koinly. You may have to do manual updates to some of the transacctions if you see errors. Unless you have made PROFITS over the personal CGT allowance there is nothing to pay. You can check the allowancce by year here. [https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances#:\~:text=6%20April%202024%20to%2029,individuals%20for%20carried%20interest%20gains](https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances#:~:text=6%20April%202024%20to%2029,individuals%20for%20carried%20interest%20gains)

OkSeries5363

Gains for active fx traders are often treated as ordinary income (so no CGT discount) There are also specific exemptions for personal use (like money for a holiday) and for small balances that do not exist for crypto. While that would be great crypto that isn't going to help if your holding/investing/trading crypto. According to Section 988(e) of the Internal Revenue Code, there is a $200 de minimis exemption for gains on personal foreign currency transactions. Over this you need report, and FX traders would need to report all.

OkSeries5363

With capital gains taxes and comparing forex traders with bitcoin, currently taxed very simialr, forex traders pay tax on profit/capital gains too. Although there a two main differences, forex trading has specific tax provisions that can override CGT. 1. Gains for active fx traders are often treated as ordinary income (so no CGT discount) 2. There are also specific exemptions for personal use (like money for a holiday) and for small balances that do not exist for crypto. While that would be great crypto that isn't going to help if your holding/investing/trading crypto. According to Section 988(e) of the Internal Revenue Code, there is a $200 de minimis exemption for gains on personal foreign currency transactions. Over this you need to reporting gains, and FX traders would need to report all.

WaterproofHuman

keep your bank account but get ur pay cheques sent to Strike. allocate a percentage directly to btc. then from ur strike account, send x amount to ur bank account to pay for bills and everyday expenses. dont buy things with btc, CGT and fees are too expensive for that..for now.

Visible_Concert382

Vintage cars are exempt from CGT, so make it a classic lambo.

Ok-Hovercraft-311

Government can change rules that just as easily cripple btc. Tax unrealised gains. Increase CGT. Decrease tax cuts to CGT. Ban mining etc. even just creating a massive negative discourse campaign against it would hurt adoption. Wouldn’t stop it and people could always use it. But its use as a hedge or store of value isn’t foolproof. I’m in on btc but just everyone seems so all or nothing. Property, shares, crypto. Diversify. Going all in is for poor people.

Newbie123plzhelp

In Australia it's not taxed if it's for personal use. If it's held for a significant period with the intention of treating it as an investment then it's taxed with CGT.

JunkiesAndWhores

They were busy moving to a country where there is no CGT, establishing residence, applying for passport, giving up current passport (especially if US - long arm of the IRS), and then cashing in. Kerching.

Interesting_Loss_907

Sure. A cool $84 Million. And posting about it here? No idea what you mean by “no taxes”, but suppose that’s dependent both on your citizenship and country of residency. If you are a US citizen, no matter where you live in the world, then the comment makes no sense as you would be subject to an enormous amount of CGT.

Head_Performance2432

could be wrong but don't forget there are CGT...

OkSeries5363

What do you mean sorry, how is cost basis minus proceeds on the disposal of an asset not simple and clear? All traders and investors, have been doing it for decades, is not specific to crypto, fx traders who trade currencies have the same events to calculate too. Cost basis - captial proceeds = capital gain/loss. If you are genuine that this is difficult to understand. Respectively, investing might not be suited to you. I would also be very careful just waiting for trumps administration, crucially his plan clearly will not involve retroactively removing capital gains. So in the meantime, you 100% still need to report all taxable events from crypto on your federal tax return. I cant see ever a full exemption of captial gains, especially one where you don't need to report trades, (other than a de minimus exemption on small trades) what's to stop other industries from simply demanding the same special treatment, eg, I traded my shares for other shares, why should I pay capital gains? It would also allow people to bypass all sorts of taxes applied by simply closing your CGT loop with a single crypto event. No details have been shared of how or when this would happen, or how it would be passed by Congress into law. Their wording has also changed from removing captial gains to "may include creating policies that reward crypto users with reduced tax rates in certain situations." They a likely referring to both, no disposal safe harbour rules and a de minimus exemption, not just removing tax on income. The most likely change, as the crypto industry has been heavily pushing for is a "no disposal safe harbour rules" these are likely the strongest and current active area of the IRS. They have also been looking at a de minimus capital gains exemptions, neither of these will help you avoid a true economic disposal events. Also not tracking you gains means you can't apply losses and fees too, fees can get expensive, this is further disadvantages your tax situation and obligations to the IRS.

OkSeries5363

You're right that crypto isn't a stock (which is ownership in a company), but for tax purposes, it's in the same broad category as stocks, ETFs, gold, silver, even collectables or an investment property. They are all considered CGT assets and treated the same. With capital gains taxes and comparing forex traders with bitcoin, currently taxed very simialr, forex traders pay tax on porfit/capital gains too. Although there a two main differences; 1. Gains for active fx traders are often treated as ordinary income (so no CGT discount) 2. There are also specific exemptions for personal use (like money for a holiday) and for small balances that do not exist for crypto. While that would be great crypto that isn't going to help if your investing in crypto. A separate but equally significant challenge is the concept of 'forced disposals' inherent in many DeFi protocols. To solve this, the industry is advocating for "No Disposal Safe Harbour" provisions, which would prevent a taxable event when users are simply pooling or staking their assets. This is a very complex policy challenge, but it is firmly on the radar of major tax authorities, including the IRS in the US, who are in the early stages of consultation and guidance.

OkSeries5363

Under current laws, even swapping one ETF for another that tracks the exact same index, just from a different provider, will prompt a capital gains event. The principle of consistency is a cornerstone of tax law, which makes carving out exceptions for a single technology a very challenging precedent to set. On the plus side this does create one loophole currently. There 'appears' to be a significant tax advantage to remaining in a single DeFi protocol that evolves it's strategies internally, versus you actively moving your funds between different protocols. The IRS guidance consistently identifies the user's action of disposing of an asset as the CGT trigger. When you deposit into a pool, you dispose of your crypto for an LP token. When you withdraw, you dispose of your LP token for crypo. If you hold onto your single LP token, you have not performed any disposal action. The protocol's internal activities, eg rebalancing assets, lending to different sub-protocols, chasing higher yield, all happen "under the hood." As long as you still hold the same LP token representing your share of that pool, you have likely not triggered a CGT. This creates a very powerful tax deferral. The value of your LP token can grow as the protocol works it's magic, and you won't pay any capital gains tax until the day you finally withdraw. Furthermore, the clock for long term the CGT discounts on that LP token continues to tick, increasing your potential tax benefit. However this comes with a huge unspoken risk, IRS position could evolve. A tax expert could simply argue that if a protocol's strategy changes so fundamentally that the underlying asset pool is unrecognisable from what you originally invested in, the IRS can then say a CGT event has occurred (e.g your original right has been terminated and a new one created, CGT event C2). This is a grey area, but for now, the simple interpretation holds. actions the pool or defi protocols take on your behalf also It also brings in concerns like the controlled foreign corporation (CFC) rules, its income tests, and taxation of foreign dividends.

OkSeries5363

They don't insert a tip, with lending and LSTs, rewards go to the pool this means the pool grows and therefore your portion/claim of the pool is more when you come back later to claim? So when you return the recipt you get more back, same with liquid staking tokens. This means when you give your receipt tokens back they were 'worth' more as you got more back from the pool, or staking tokens than previously. A common misconception is that depositing cryptocurrency to earn a yield is treated uniformly for tax purposes. However, under tax law, there is a very critical distinction between how Centralised Finance and Decentralised Finance are treated, its an issue the IRS is currently grappling with given the precedent it sets. Centralised Finance (CeFi) The Loan Analogy In a typical CeFi "Earn" program, you deposit an asset like Bitcoin with a centralised company. The platform's Terms and Conditions often frame this as a loan. Because you are lending your BTC with the right to get BTC back, you may be considered to have maintained "beneficial ownership." Consequently, no disposal event occurs on deposit, you avoid an immediate CGT event, and your 12-month holding period for the CGT discount continues. Decentralised Finance (DeFi) The Disposal Problem In a DeFi liquidity pool, the process is fundamentally different. You send 1 BTC to a smart contract and receive a completely different asset, an LP token that represents your share of the pool. The IRS views this as a disposal of your Bitcoin. This action triggers an immediate CGT event and resets your long term discounts. This legal distinction creates a system where users are financially incentivised to take on the higher counterparty risk of a centralised platform to achieve a better tax outcome. The challenge of creating fairer DeFi tax rules While implementing a "no disposal safe harbour" for DeFi may sound like a simple solution, it presents profound technical and legal challenges for legislators. The difficulty lies in defining the boundaries of such a rule. What qualifies as 'In Kind'? If you deposit 100% ETH and get an recipt token for a 100% ETH lending pool, that's simple. But what if the LP pool is 50% ETH and 50% USDC? Is that still "in kind"? What about a 3-token or 8-token pool? What about when the Composition changes? What about 'Financialised' LP Tokens? What happens when the LP token itself stops being just a receipt and becomes a financial instrument in it's own right? You can use LP tokens as collateral for loans, trade them on secondary markets, and even stake them in other protocols. At what point does the LP token become a new, distinct asset, breaking the "in kind" link to the original deposit? Gains could be rolled over indefinitely from one high-yield protocol to another. The lines blur between what is a simple "receipt" and what is a complex, interest-bearing financial product. This could lead to a significant erosion of the tax base, as value is generated and compounded outside the reach of clear taxing points. This create a legislative challenge. Legislators would have to draw a precise, legally defensible line between a simple liquidity pool and a complex protocol that creates literal derivative product. Creating this definition without opening loopholes for unintended assets to get the same treatment is extraordinarily difficult. Creating a special exception for DeFi also risks undermining the integrity of the broader tax system. What would stop other industries from demanding similar treatment? For example, an investor might ask, "I swapped my individual TSLA and AMD shares for units in a tech ETF which holds just TSLA and AMD. That's an 'in-kind' swap, why do I have to pay CGT?"

OkSeries5363

Defi lending is usually easier for lending APY but creates a taxable event. At deposit the value of receipt token is your new cost basis, when you withdraw from the pool thats the disposal of the receipt token, so CGT is then calculated, so returns from lending can be eligible for CGT discount instead.

OkSeries5363

I think you might misunderstand CGT. The caculation is simple, you just dont have the data to caculate, the IRS can't really make it any simplier for you? Extending the tax code heavily support crypto also doesn't really make sense, why should crypto traders get special provisions while all other investors get treated the current way? They are currently working on disposal and safe harbour rules for Defi tho! This is big step and the solution lies in advocating for the very changes I mention eariler, as these are designed specifically to solve the main issue. A "No Disposal Safe Harbour". This is the ultimate fix for phantom gains. By eliminating the CGT event on intermediary/similar DeFi swaps, tax is deferred until you finally sell your assets back into USD dollars. At that point, your tax liability would perfectly align with your actual, cash-in-hand profit. (This ovbiously would not apply to different assets like trading between BTC and ETH) This is the most difficult technical hurdle. How do you legislate what qualifies for this "safe harbour"? \- If you deposit 100% ETH and get an LP token for a 100% ETH pool, that's simple. But what if the pool is 50% ETH and 50% USDC? Is that still "in-kind"? What about a 3-token or 8-token pool? \- What happens when the LP token itself stops being just a "receipt" and becomes a financial instrument in its own right? You can use LP tokens as collateral for loans, trade them on secondary markets, and even stake them in other protocols. At what point does the LP token become a new, distinct asset, breaking the "in-kind" link to the original deposit? \- Legislators would have to draw a precise, legally-defensible line between a simple liquidity pool and a complex protocol that creates a derivative product. Creating this definition without opening loopholes for unintended assets to get the same treatment is extraordinarily difficult. What will likely happend, Instead of a blanket rule for all of DeFi, the government will create a pathway for protocols to become "regulated" or "qualified." This would be an opt-in system. A DeFi protocol could gain a "tick of approval" by meeting certain standards, potentially administered by a licensed US entity. These standards would address the government's key concerns.Once a protocol has entered the regulatory perimeter and becomes "Qualified DeFi" the government could grant it a specific, more favourable tax treatment. This creates currently the ultimate "Win-Win-Win" scenario. The Government Wins, they achieve their goals of maintaining a fair tax integrity, with the risk is contained to a defined, compliant sector. Users win, we get the best of both worlds. You can access innovative DeFi products with then benefit from clear, fair tax rules that don't penalise you for participating in DeFi over CeFi. This phased, incentive-based approach is the most likely path to resolving the current stalemate. It avoids a "one-size-fits-all" rule, acknowledges the government's very real concerns, and provides a clear and powerful incentive for the DeFi industry to build safer, more transparent products for everyone. Tax law is built on a set of core, long-standing principles. The concept of "disposal" is fundamental. Changing this isn't as simple as just removing from crypto trades.

OkSeries5363

You dont need to know how much fiat you put into coinbase, tho If you cant find the your buy price, it's fine to use the price of bitcoin that day on the day of the transation. Also coinbase don't delete your transations they should still be there. IRS should have a number of options if the transations were deleted by coinbase. Things like using the date of the bank transfer, which your bank should have records. Yep my transations werent labled? Pretty sure I had over 20k defi transations to work through. You just have to follow the transation on chain, did it get sent to a wallet you control, then it yours and its not a disposal, did it get sent a wallet that wasnt yours. its dispoal and is CGT event, did it get deposited into lending pool then its a disposal and vaule of the recipt token is used as your new cost basis.

OkSeries5363

False, FX traders pay capital gains too? CGT applies to assets denominated non-USD currency and non-USD currency itself all the same

OkSeries5363

Unfortunately thats just how capital gains work for all investors/traders, otherwise all capital gains could be avoided and very simply. Have you ever traded shares or property or gold, wouldn't be very fair if crypto traders were treated differently to other currency traders. There is no issue with the USD layer being gone it is irrelvant to calculating the gain/loss, you simply use the market price. That's like saying I should be able to sell investment property tax free if I trade it for gold and not USD? Or not pay captial gains on my shares becuase I traded it for other shares? I think you confused about Capital gains. It does not matter if the an asset denominated in a non-USD currency or literally non-USD currency itself. Captial gains occur on any currency swap/assest swap, think about it, wouldn't be very fair FX traders didnt have pay capital gains but people who trade shares do? Flucations against the USD promt a capital gains event all the same. It works the same for all traders doesnt mater if you trade property, crypto, equities. \-If you buy $100 EUR for $100 USD and in 1 year you sell the $100 EUR for $120 USD, you have realised a $20 USD gain on the disposal of 100 EUR. \-If you buy $100 EUR for $100 USD and in 1 year you sell the $100 EUR for $110 GBP. You would realised a gain or loss on the disposal of EUR againt your local currency USD. The market price it simply use to caculate. Your capital and the now realised gain were used to buy the GBP. In both senarios purchased 100 EUR (cost 100 USD), disposed of 100 EUR, so you caculate the market value of 100 EUR in USD at the time you sold, the difference is your gain. You cost new basis for the 120 GBP is simply whatever 120 GBP equals in USD at the time of purchase. There is actually a different issue with crypto taxes that needs to be resolved but it would extremely challenging to resolve/potentially impossible for the IRS to fully resolve. Currently depositing your ETH in a defi loan in a platfrom like AAVE is considered a dispoal so in that sense you have realised a phantom gain as you still hold/control the same amount ETH but depositng into defi pool must force a disposal and the "cost/vaule" reciept token is you new cost basis. Oviously this doesnt mean you pay more tax as it simply moves your cost basis up but having to pay more now for less later isnt always optimal. The tax treatment also encourages the use of CeFi over DeFi as with a CeFi lending this is avoided, your 12-month clock for the Capital Gains Tax (CGT) discount is crucial and will also be reset. The challenges of implementing rules like "No Disposal" safe harbour provisions and Like-Kind rules in Defi lending and yeild farming are quite large concerns, given implementing them open up a massive issue and loophole and has large implcations for taxation as whole. Why should cryto traders get special safe harbour rules. Equities traders could argue the same thing, same with currency traders. You could consider swapping a tech ETF for another tech ETF with the same assests is same as swapping LP token with the same assests inside. This could also remove a current defi loophole as holding a receipt token that grows in vaule via rewards means it gets taxed as a capital gain, in CeFi platfroms rewards would be considered taxable under income so you miss out the capitals gains discounts.

Acceptable_Hand8622

Buy some. Don’t time your entry, now is the best time. And DCA. Time your exit - only for a profit and never all of it. Exit fees are horrendous when the price keeps going up. Good luck. Also selling for profit triggers CGT in most places so learn how to minimise by holding at least 12 months. Lots of other things to learn here, but timing the dip is a golden rule that we never discuss. What if it never dips to today’s price again.

Acceptable_Hand8622

Not that I plan to exchange for fiat, but what are the fees like. Surely more for an ATM than through an exchange. Paying for convenience? I would expect any withdrawals I may make in the future will be more than an ATM will allow anyway. Until mass adoption and CGT law changes, ATMs are for fiat imo. Live with fiat, save in BTC.

uncapchad

nope exposure is very limited here. Closest you can get is adding a BTC treasury stock such as MSTR etc in an ISA/Sipp. UK govt have no truck with cryptocurrencies except to tax us, no breaks or concessions at all. CGT allowance also dropped to £3000 this year.

coinfeeds-bot

tldr; A recent legal ruling in Australia may redefine Bitcoin as money rather than property, potentially exempting it from capital gains tax (CGT). Magistrate Michael O'Connell's decision challenges the Australian Taxation Office's (ATO) current stance, which treats cryptocurrency as property subject to CGT. The ruling is under appeal, and the ATO has not updated its guidance. If upheld, this could lead to tax-free Bitcoin transactions, but for now, existing tax rules remain in effect, with the ATO enforcing compliance. *This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.

Herosinahalfshell12

Love those fess and CGT?

jonnytitanx

Close but not exactly. The ATO does allow Crypto to be spent as long as it was bought for that specific purpose and not as an investment. For example, an online store that only accepts BTC, you could purchase Bitcoin for the sole reason of making that transaction and not incur CGT. If you paid using BTC you'd held for some time, they'd likely treat it as a taxable event. It's honestly a bit of a grey area, but ATO explains it on their website.

Darren0590

Yes, leave the country for 5 years not having the UK as permanent residency and you will not pay CGT.

W1_NNY

At £3k per year he is never going to capitalise on the BTC he has. Even selling CGT free will take multiple decades

Bred_Slippy

Remember you get £3k per tax year as a CGT allowance so you might want to disinvest on either side of a tax year if the timing's right.  You can also deduct any buying and selling costs from the gain. 

W1_NNY

Yep they are #%^*+=$€ Is there anyway to avoid this CGT while living in UK?

Mental-Health-Crisis

Don't need to. No CGT in Germany after one year holding period...but I would if I had to do it. Taxation is theft especially after already paying income tax and then investing MY money only to be taxed again? No fucking way. Having a few bank accounts and half a dozen CCs is always a good idea moving fiat around - from Wise to a CC to a bank acc, and back to another CC and back to buying stablecoins or stock only to sell it again after a few hours. Concerning your first paragraph - just stay below the treshold, apart from that I still don't believe they report any of this or do you have a source for that claim?

kipha01

I was pointing out how dumb it would be to take a lump sum and end up paying all that in tax, I guess that went over your head. I will of course minimize tax where possible leveraging things like CGT allowances etc. I am not using BTC to buy coffee I am using my coffee fund to DCA BTC.

UltraSBM

UK government state that only transacting in GBP does not attract any capital gains on forex. Any other currency is fair game. Whether it’s EUR, USD, or BTC. Buggers. Buy BTC with GBP, hodl, sell for GBP. CGT.

Due-Candy-8929

Alts are going to out perform - better to bring in new money and not take the exchange fees buying and selling… also depending on how long you have held tax wise you might benefit ( for me if I hold a year I get a 50% CGT tax discount…)

CorrectTadpole9997

First comment to hint at CGT factor! Makes shopping with btc less fun sounding.

kipha01

So I sold a bunch of coin that was down for some other coin that was down more to harvest the loss of the first coin so when it comes to tax time I have more CGT allowance. Hopefully that works out and the second goes higher X SEI to BONK