Crypto Traced for Taxes and Crime; Investors Should Note Tax Rules
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Bitcoin's early adoption for illicit activities was due to lack of infrastructure, regulations, and enforcement at the time, not its anonymous nature. Its traceability is actually higher than cash.
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There are now many tools to analyze crypto transactions, leading to identification and arrests. Regulations also continue to evolve to address risks. Over $8B in crypto has been seized from law enforcement actions.
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Investors should be aware of realized vs unrealized gains/losses and their different tax implications. Losses can offset other capital gains.
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Crypto taxes are due when gains are realized. Consider tax implications before reinvesting proceeds or selling winners.
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Unrealized crypto losses can be "harvested" by selling and quickly rebuying, unlike stocks. This tax benefit may change once wash sale rules apply.