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Cryptomonial Engineering, A New Paradigm For Crypto-Asset Owners

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Contrary to popular belief, cryptocurrencies were not invented to eradicate fiat currencies and banks. It’s entangled to traditional currencies, finance and payments channels that respond to certain inefficiencies. Thus, like the laws of the market, security, or regulation, the rules of the game are more or less the same and tend to become more uniform. Nevertheless, there are still some grey areas, particularly with regard to taxation.

In recent years, with the explosion of the number of crypto-currencies, new terms such as “HODL”, “REKT”,” BAGHOLDER”,” SHILL” “When LAMBO ?” and others have appeared, symbolizing the revival of this market. At the same time, many people have become rich, sometimes overnight. I am thinking in particular of the peak of the main cryptocurrencies observed between the last quarter of 2017 and the first quarter of 2018, with Bitcoin reaching the historical price of €18,086.13 (Sat 16 Dec 2017, $19,665.00). With this coin alone, more than 22,000 people have become millionaires to date. All these newly rich people have found themselves with a new life but with new constraints, including fiscal ones.

The grey area of cryptocurrency

Let us be clear, there is to date no common policy for the taxation of gains/losses related to cryptocurrency.

Governments prefer to leave this sector in the grey area. This in-between is problematic because, as in all situations where the contract is not clearly defined, each party tries to pull the quilt on its side. In this case, by playing with the tax system and therefore the state, this can be very risky if one is not perfectly advised. Many people do not realize how much the gains obtained via exchangers and other products can have a critical impact on their professional and personal tax returns. It is therefore essential to know what you are getting into and what the repercussions of the actions you take will be.

As long as you stay in cryptocurrency, there is for the moment no substantial tax problem. But, as the use of these coins and tokens is not yet global, you will be obliged to return to a conventional currency one day or another. This is where the main problems begin.

Who has never been blocked by his bank after cashing in profits from Binance, Kraken, or Coinbase, to name but a few? You are then obliged to go to your branch, which is usually not crypto-friendly, for obvious reasons as its seen to be a threat to the fiat currency as well as traditional banking, to explain to them what is the source of the money. You could say that there are no clear rules and that you can do whatever you want with your money. Most of the time, depending on the level of income you receive from these exchanges, you will be asked to stop such transactions or you will simply be kicked out of your bank.

From the bank’s point of view, Crypto companies are unregulated entities operating in an unregulated field where most of them are scams. As a former banker, I can assure you that this is the mental software deployed in banker’s minds.

SAPIAN CAPITAL – offering today the banking of the future in a global economy
As far as SAPIAN CAPITAL OTC (SCO) is concerned, we are firmly convinced that DLT (distributed ledger technology) will deeply change the perception and the way people will bank tomorrow. While we are not there yet, banks still have a big card to play in this new field that DLT has started to disrupt. Even if certain categories of the population will increasingly use monetary crypto-based services for all their daily transactions, such as remittance services, the banks will not collapse. They are just going to evolve as they always have, with the financial services market being big enough for both players. With over $ 7 Trillion in transactions on a daily basis, banks are the ones that control over 99% via fiat currencies with over 70% via the US Dollars. The benefits of digital currencies is slowly being realised by most major institutions including Goldman Sachs, JP Morgan and a number of others. Digital currencies are now being taken more seriously and even piloted via several governments including China, UK, India, Germany, France to name but a few.

Many companies and exchanges now offer services related to this new asset class, ranging from the simple purchase of a coin to the development of a structured product such as a future, plus the implementation of leverage or margin calls. There is also a growing possibility of OTC transactions, which are vital for market liquidity and are intended more for a different user class of institutional owners and “Whales”. But here again, there is nothing about tax and asset optimization strategies in connection with crypto-asset.

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