These well-known cryptos are in danger from the G20

We are now seeing more and more countries preparing regulations for crypto. This also applies to international collaborations. One of these collaborations is the G20. The proposed rules could pose a threat to crypto trading. We explain this and, of course, start from the beginning.

What is the G20 and what do they have to do with crypto?

The G20 is an international collaboration between the 19 largest economies in the world and the EU. In this context, efforts are being made to strengthen international financial cooperation. For example, they agree on rules for how companies must pay tax and on the fight against money laundering and terrorism.

To harmonize crypto taxation, they have drawn up the Crypto-Asset Reporting Framework. This document explains how companies should treat tax on crypto. The document is an addition to existing agreements on taxation.

What has the G20 decided on crypto?

With this framework, one decides how the exchange of tax information on crypto trading is arranged. This framework is an addition to an earlier framework which is now implemented in 100 countries.

The new rules do not apply to 3 types of crypto:

  • public digital crypto coins;
  • Crypto that cannot be used for payments and/or investments;
  • Crypto backed by a specific fiat currency.

Why is G20 decision on crypto relevant to individuals?

In the document, the responsibility for collecting data is mainly placed with stock exchanges and other professional intermediaries. In order to comply with these rules, trading houses will therefore have to take measures so that they can (better) identify their customers. In addition, the document expands the reporting obligation with regard to the number and type of transactions.

The trading houses will therefore have to take measures so that they can monitor and record their customers’ transactions in the desired way. In addition, many participants in the G20, such as the United States and the European Union, are busy creating their own rules for investing in crypto. This tax liability will be included here.

In addition, we read in the frame a limit of $50,000 per transaction. For the avoidance of doubt, this limit applies to individual transactions only. All transactions (no matter how small) must be reported in consolidated statements. As a result, six transactions of $10,000 can still be signaled.

What are the implications for your crypto?

Firstly, these rules increase the traceability of the tax. As we know, crypto transactions are already reported in the Netherlands, but exchanges in other countries must now also report. With so many countries (100 jurisdictions) participating in this regulation, the question is what it means for exchanges still operating without a KYC policy.

Additionally, this has implications for the tradability of your crypto. Although crypto trading was never actually anonymous, the ability to trade crypto pseudonymously becomes much less. Additionally, this may pose a threat to various cryptocurrencies. We list a number of cryptos that may be at risk.

These cryptos are at risk due to the G20 framework

First of all, there will of course be an impact on Bitcoin crypto trading, as this currency accounts for more than 50% of transactions. The danger, on the other hand, is not so great.

We will expect many more problems with the privacy coins. These aim to keep data from parties involved in transactions anonymous, which is contrary to the desired transparency and reporting obligation. Popular crypto coins such as Monero (XMR) are therefore offered on fewer and fewer exchanges.

Currencies with high volatility are also at risk. When strong price fluctuations (especially increases) can cause your crypto holdings to suddenly exceed $50,000, your transactions are suddenly reported individually, and many crypto owners will not like that.

We will undoubtedly feel how the framework regulation will develop further as soon as the new crypto laws are introduced in Europe and America, but it is certain that the industry will feel it. Finally, the question is to what extent these regulations and the demand for transparency affect the popularity of crypto. After all, anonymity/pseudonymity is one of the 3 pillars of cryptocurrency success. So there is no doubt to continue…

You can read the entire OECD’s Crypto-Asset Reporting Framework here.

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Please note: We never provide financial advice, so you cannot interpret our contribution in this way. Always do your own research and decide on rational grounds if, when, in what and how much you want to invest.

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G20 decides: These well-known cryptos are in danger

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