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According to a report by Crypto.com, global cryptocurrency owners increased by 39% in 2022 – rising from 306 million in January to 425 million in December.

And with the adoption consistently soaring with every passing year, it uncovers some serious regulatory challenges. Regulators from across the globe have joined hands and are trying to make coordinated efforts to regulate this space. Kryptos is here to uncover what these regulations actually mean in terms of crypto investments and taxes and how they will affect you.

What is The Need For Global Crypto Regulations?

Crypto has evolved significantly since 2011 when it was primarily associated with Bitcoin. It now includes all digital assets and has revolutionised sectors such as Finance and Art. Small businesses embrace crypto for its modern utility, while big businesses hold it as a hedge against inflation on their balance sheets.

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Source: Statista

However, it’s not all good news. The crypto space represents a significant economic value and since there are interlinkages with the traditional financial ecosystem and capital markets, its collapse may have severe repercussions on our existing financial frameworks. 

The fall of Terra Labs and FTX had a major impact on retail and institutional investors. Crypto fraud and theft are more prevalent, and money laundering with crypto tumblers is a negative use case the industry was initially accused of.

Crypto assets pose real threats such as operational and financial integrity risks, lack of investor protection, insincere reporting, and over-dependence of small nations on crypto in the absence of proper payment infrastructure. These threats highlight the need for a comprehensive regulatory framework.

Crypto and The Global Regulatory Landscape

Governments globally tighten crypto regulations to protect against financial losses. Canada adopts a relaxed approach, offering a 50% capital gains tax discount. Conversely, India takes a conservative stance, imposing a 30% tax rate on all crypto transactions, excluding additional charges. Diverse strategies address crypto asset taxation.

Europe's AMLD-5, AMLD-6, and FinCEN's final rule in the USA enforce strict KYC regulations on exchanges. The proposed DAC-8 framework in the European Union, launching in January 2026, will require exchanges to collect, validate, and report user-related information for crypto assets. This aligns with the upcoming implementation of the CARF in 2024, marking significant progress.

MiCA (Markets in Crypto-Assets) is another regulatory framework proposed by the European Union to bring governance practices to crypto firms and avoid financial instabilities like rout and contagion.

Therefore, if you’re planning to hide some crypto transactions from your local tax authorities with the intention of saving a couple of bucks in taxes, don’t. It might attract legal trouble because most tax authorities can track your crypto transactions and correlate them with your KYC details to identify discrepancies. 

Regardless of what part of the world you reside in, you should honestly report all your crypto transactions and file your crypto taxes on time. If you have any doubts regarding how to file your crypto taxes, or how it is taxed in the first place, you can visit Kryptos’s Ultimate Tax Guide.

Kryptos’s Role in Global Regulatory Efforts

Regulators in most countries compel residents to maintain proper records of their crypto transactions from the past 3-7 years depending on the country. In fact, the Australian Taxation Office (ATO) recommends using a “trusted crypto tax calculator” for proper record keeping of crypto transactions.

Kryptos has collaborated with the  INATBA – International Association for Trusted Blockchain Applications, a trusted and influential association in the heart of Europe that facilitates dialogue between public and private entities for the global convergence of regulatory approaches and the global adoption of blockchain and related technologies. You can read more about the collaboration here.

It is one of the most trusted crypto tax calculators that offers over 2000+ wallet, exchange, and DeFi integrations and lets you fetch your transactions to the central dashboard. Moreover, with features like live tracking, new transactions are immediately added to the ledger. 

You can also use Kryptos to generate country-specific, legally compliant tax reports within minutes. 

Conclusion: 

Although the importance of these regulatory changes can’t be denied, their existence makes crypto taxes more intimidating. That’s where Kryptos comes into the picture with a comprehensive set of tools and resources to educate and empower individuals and help them file their crypto taxes conveniently.

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All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!