As Bitcoin breaches fresh all-time highs, compliance with the tax authorities becomes a confusing, yet key, priority for anyone booking profits.
The Tax Man Cometh
With Bitcoin having broken the $10,000-mark yesterday and currently sitting just shy of that level as of the start of play on Thursday, many holders will be considering cashing out some of their portfolios and converting it to fiat so as to book profits on their longer-term coins.
Sure, the longer term hodlers will denounce the necessity to cash out but in reality, bills can’t be paid in crypto just yet (well, for the most part) and there is no shame in taking a few percentage points (or more) off the top of any holdings to mitigate risk a little bit.
Indeed, as we learned last week, even Charlie Shrem holds just one-third of his net worth in cryptocurrency.
One of the major concerns when converting crypto to fiat, of course, is tax liability. For most people in most parts of the world, there exists considerable confusion surrounding what’s owed and to who and at what levels.
And interestingly, this confusion is not just limited to individual Bitcoin holders.
Balancing the Scales of Tax Compliance
Crypto businesses, and, in particular, exchanges and market makers, need to remain compliant arguably more so than individuals and maintaining said compliance can be a complicated task.
Well, as per the latest news, cryptocurrency accounting firm Libra just came up with a solution for these latter entity types.
The solution is a platform designed to automate and optimize reporting and compliance as well as control the central processes that underpin said compliance for the exchanges and market makers mentioned above.
It’s called Libra Crypto Office and, as per the company’s website:
(it’s) the industry’s first, institutional-grade solution purpose-built for the technical nature of blockchains and cryptocurrencies.
Here’s what Philippe Bekhazi, CEO of XBTO (a crypto trading, mining and investment group) had to say about the product:
Libra Crypto Office eliminates manual and inefficient back and middle office processes. The crypto markets operate 24/7/365, which means we must be able to produce accurate financial reports automatically, and in real time. Libra’s software will meet the needs of XBTO and our investors as we grow our business.
This is likely just one of many of these types of products and services that are going to pop up over the coming few years but it highlights a growing trend towards the necessity for framework support in this space.
What do you think? Will you be booking any profits and converting to fiat on the back of the latest run? Let us know in the comments section below!
Images courtesy of Flickr/401(K) 2012, Shutterstock
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