Hello, in this lesson we are going to talk about tax law and regulation. I'm sure you've heard about people becoming millionaires using cryptocurrencies or more specifically using Bitcoin. they've bought them years ago whether or not they planned on doing this. But they bought them years ago when the price really low less than $1. Now, it's actually today to over $7,000. It's in its all time highs and has been over the last few days.

And over the last couple of weeks or so, in general. It's like it's crazy. And this is the second of November. And so yeah, like I was saying, a lot of people have becoming really, really rich and people want to know what the tax situation and for making it clear, it's still very early so there isn't solid tax. I'd say you Information and exactly how the government's going to be handling this, but there are tax laws. So let's cover what isn't taxed.

So what isn't? tax, tax, not tax taxed, is mining. So if I were to have a powerful reaction doesn't really matter what rate of up if I mined less out of 10 coins, those coins aren't taxed. So mining is not taxed also, upon asterik here also sending and receiving coins are not taxed either. So if I have 100 bitcoins, I send you 10. You don't get taxed, neither do I get taxed.

Very simple stuff. So far. It's pretty similar to the way it is With money or at least in the sending and receiving aspect buying so if I were to buy some coins, I don't get taxed for that. If I were to exchange for never currency, so let's say for exchange from Bitcoin. So imagine if I go from BTC to you knighted States dollar that is not taxed. But what is tax of pretty much everything that's not what is taxed.

This is all the stuff that's going to be taxed is the first thing that we'll actually cover is capital gains, capital gains, and this is generally done through difference In price, so imagine if I were to buy one bitcoin, and it was when you were the thousand dollars, and let's say, two months later, I sell that Bitcoin and it was selling for $100,000. That's a big increase, but let's say I do hundred thousand dollars, the $99,000 or taxable, if it remains in bitcoins, then that that's not taxable. But if let's say I sell it, then that is taxable. You can think of it like buying art or anything really. So if I buy something, I invest in something, let's say it is literally a painting, and I spend 100 pound on it. To mark the value of the painting I won't get taxed on the war will be get taxed on the floor, choose to sell a painting so let's say for Sally for a million pound.

I said big Ingrid I'll get taxed on the million minus the initial cost price. And that actually links in with exchange in it because though exchanging it from cryptocurrency to let's say a fear based currency is in touch, the difference is taxed, but also it's the actual overall capital gain. So if let's say we are doing this a bunch of times throughout the year, maybe we do free transactions on them, let's do this we do free transactions. So we buy bitcoin and at let's say $1,000, we sell it at $2,000. So we have made a profit of $1,000. And say we see transaction number one, transaction number two, if they if we When he went down a bit, and it is now 1500, and it goes up to 4000, that is a two and a half thousand dollar profit.

So, so far got three and a half dollar profit, but maybe just before the end of our tax year, we buy it at, let's say 1200 dollars, and we are actually no, let me choose another figure. So that's a it's really high, it's at $50,000. But we're still confident that it is going to increase from 40. It doesn't and we sell it at, let's say $1,000. So we've actually made a loss of $49,000 on this transaction. So if we were to add all that up, it is 1000 plus two and a half thousand minus 49,000.

One 500 plus two and a half thousand is three and a half thousand, we take that away from 49,000 that is 45 and a half thousand. So we have made a loss of 45 and a half thousand. So that is a loss right there. So we will not keep paying any capital gains, we can use that as a deduction. That's something very much it's not of each individual exchange. If there are any profits or losses, it's the overall at the end of the tax year, the difference in price and let me put that that difference in price.

Okay. And that's something worth noting. So is there anything else that can actually be taxed? And yes, selling goods using coins. So if I'm a merchant, let's say on Amazon, I start Taking Bitcoin transactions, if I sell stuff using bitcoins that can be taxed. So don't let it be just to use a sending and receiving coin with wacky selling goods, then the actual seller has to pay tax on there as well.

And the other thing is corporation tax. So this links in with the selling goods, aspects of the corporation tax, and this is actually just treated. It's treated like foreign currency and tax laws. So that's everything that could be taxed and can be taxed. But at the end of the day, we're very early in cryptocurrencies, whether it's Bitcoin or ether. cerium or ripple, dash Mineiro whatever, you're still in the early days, so things will change the government or people in government policymakers will actually educate themselves on what cryptocurrencies really are, and actually take notice and when that really does happen, which is already sort of happening, then I guarantee there'll be more tax laws, and there'll be torture tax laws put into place so this is just as it is.

Now. Left I'm going to cover is what potentially could be taxed. And okay, so this is gonna be an interesting one, the coins current value with exchange and what I mean by that, imagine, if I were to buy bitcoin at $1,000 And at the end of the financial year, it is worth $100,000. I haven't imagined if I haven't exchanged it. But the US I'm not used. I mean, the government might put out a tax law that say, regardless of whether or not it has been exchanged from cryptocurrency to fear based currency, the actual difference will still be taxed and you'll have to either exchange it to pay it in its current form, aka fear currency, or you'd have to pay using fear currency in or the means.

So if you had enough money to pay it, then you would have to pay the tax. If now you'd have to actually liquidate it and then pay the tax so they might impose you guys or what form it in so no longer become like an asset locker painted. It actually is just they're saying it's a currency and you need to do that those who for the Individual, what they might also do is just tax the coin itself. So at the moment, government isn't taking cryptocurrency in any form, but they might say, Okay, if you got cryptocurrencies and if the activity that you've gained the cryptocurrency to the increase in cryptocurrencies, if it would be taxed usually, then we're taxed in the same way so that the dollar say, if our tax law is 10%, and you've got 10 coins, or the state one of your coins, so they might do something like that.

And what's really scary and exciting in a way is that because it's all on a public ledger, if something like that would happen with government involvement, then they could theoretically assuming the network allows it allows them to do it, and he's essentially baked into it. This will probably be a hard fork in itself. The Depending on the currency, they could tax you automatically so they will know exactly how much you've gotten not to some degree of accuracy but literally down to the left to Toshi, which is like a 0.00000001 of a Bitcoin is a Bitcoin but with any sort of currency so they quit taxing automatically. So that's quite a scary for for some people and good for for others. So auto Matic Texan. So this has just been a overview of the tax law and regulation, essentially just around the world, different countries will have different laws and regulations.

So if you're interested in cryptocurrency, which I'm sure you are, if you're watching this video, feel free to check out to Google, the different laws in the UK, US, China, because they will differ, especially if you're operating within those countries and you plan on using cryptocurrencies. Definitely check the laws within that country. That's it. If you have any questions, feel free to reach out. And I look forward to seeing you in my next awesome crypto lesson.