You may know that I lost a significant amount of money during the Bitcoin crash of 2021 and the subsequent liquidations. What you might not know is that after losing most of my net worth in cryptocurrencies, I received a hefty tax bill from our local tax authorities for almost €500,000 in profits that I supposedly made during the crash.
What Happened?
In an attempt to protect my crypto assets from liquidation, I moved all of them to Nexo as collateral. Despite this effort, I still lost everything. However, this action inadvertently triggered a taxable event in the eyes of the taxman. By transferring my cryptocurrencies to Nexo, I had unknowingly "realized" profits from the time I initially bought them to the time I deposited them onto the platform.
According to our tax officials, moving crypto from one wallet to another, or to an exchange is considered a taxable event — much like transferring money or assets from one bank to another. This was something I was completely unaware of at the time. Unfortunately, ignorance doesn't exempt one from tax obligations.
Living in Fear
Since then, I've been absolutely terrified of moving my crypto investments or even disclosing what cryptocurrencies I hold or have held. The last experience proved disastrous, leaving me deep in debt due to the tax burden resulting from the 2021 crash. I'm now obligated to pay €10,000 each month until the €200,000 debt is settled.
Of course, this wouldn't be enough to put me in prison, yet.
The Implications of AML and KYC Regulations
If you've ever owned privacy-focused cryptocurrencies like Monero, used mixers or tumblers, or even conducted peer-to-peer transactions, you might unknowingly be on shaky ground legally. Activities as simple as using cash or accepting compensation for mowing a friend's lawn are considered taxable events. Have you reported every single one? How about Hive profits, or whatever you made from your last Splinterlands session?
What deeply concerns me about Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations is the erosion of personal privacy. We're essentially obligated to report even the smallest transactions to our governments, and when it comes to crypto, the scrutiny intensifies. Given that most blockchains are transparent, every transaction we make could potentially be used against us.
These kinds of predatory regulations feel like an erosion of our basic human rights — an overreach that leaves us ordinary people at the mercy of complex and unfair systems.
Choosing not to follow these laws can have serious consequences, potentially labeling us as non-compliant — or even something worse.
We can't be certain whether the information we provide to governments will be used to protect us or could be turned against us. The mere possibility that we're handing over the keys to our own undoing to entities that might already view us with suspicion is incredibly unsettling.
A Community Under Threat?
As members of the Hive community, many of us might inadvertently find ourselves in precarious positions. The first to face consequences could be those who've openly declared their reluctance to pay taxes or fully comply with regulations. Even those who do pay taxes but value their privacy might not be safe from scrutiny.
Can Our Voices Be Heard?
Is there a way for us to make a meaningful change? I'm not sure, but I believe it's crucial to start a conversation about these issues. The balance between regulatory compliance and personal privacy is delicate but essential. We need to discuss how laws impact ordinary people and explore possibilities for fairer regulations that don't compromise our fundamental rights.
What Can We Do?
- Stay Informed: The first step is understanding the laws and regulations that affect us. If you don’t know your rights or obligations, how can you protect yourself?
- Engage in Dialogue: Let’s talk about these challenges as a community. Your experiences might be more common than you think, and sharing them opens up the possibility for collective action.
- Advocate for Fair Policies: If we stay silent, nothing will change. Reach out to policymakers, join organizations, or simply support movements that push for regulations that protect both privacy and financial freedom.
- Protect Your Privacy: Think carefully about your financial and personal data. We might not have control over everything, but being mindful of what we share can make a difference.
I know this might sound overwhelming, but I want to leave you with one final thought: We’re not powerless. Even in the face of unfair regulations, there’s strength in numbers, in conversations, and in staying informed. I've found myself in a nightmarish situation, but if there's one thing I've learned, it’s that knowledge is our best defense — and so is community. If you're in a similar boat, don't isolate yourself. Let's figure this out together.
That’s a really bad experience. The law in your country is very unjust and illogical. I hope you could talk to some parliamentarians who know about crypto and relevant law.
I think most lawyers are rather useless as they don’t know much about crypto either!
It’s better to talk to students lawyer doing major on crypto issues. You ought to read on cases concerning crypto legal cases in your country too.
I think the long run doesn’t exist! Only the medium term (2-5 years)! Geopolitical issues are changing the world forever.
You’re too naive about the legal profession; they don’t have a heart. Bigger upheavals are coming soon. All legality might be suspended when the big war broke out.
Take care.
That's a strange reasoning - if I wire money back and forth between my two bank accounts, these transfers cannot be a subject of taxation. Similarly, moving crypto from one wallet to another is merely a transfer. You don't trade one for another or anything.
I am sure you've discussed it with lawyers and accountants, as we're not talking pennies here, but still. Not really in line with the common sense.
I thought the same thing. From what I understand, this rule is applied when someone isn't technically "cashing out," but the tax authorities still view it as a taxable event.
To be honest, thinking about this still makes me feel physically ill. I guess I haven't fully processed everything that happened.
I feel for you mate :/
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Nobody is handing it out.
Except the anarchists.
They just want to go home and leave you alone.
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Exactly the reason why I am about to travel and open bank accounts in Dubai and Portugal. I have no footprint in or out of crypto besides the hack back in 2018 that cleaned me out when was just getting started. This was below the tax threshold and why I am only accumulating and not selling into FIAT. Dubai has a confidentially agreement with all it's banking clients and Portugal if you keep your crypto for longer that 12 months is 0% tax. I do not mind paying tax as everything I have is clear profit and taxable so it makes it rather easy in my case, but somehow do not think they deserve it for the way they have treated crypto investors. If they had done their job and regulated crypto properly then there would be no confusion. I hope your situation gets resolved.
I totally understand the appeal of moving to more crypto-friendly countries. It sounds like you’ve found a solid strategy that works for your situation, especially with their tax benefits. I fear that having a family, and already having lost most of my crypto, moving might not be the easiest solution for me.
That said, I think Portugal is still somewhat of a question mark, being part of the EU. Regulations there might change in the future as the EU updates its stance on crypto. It’ll be interesting to see how that develops.
I share your frustration with how crypto investors have been treated, especially when the regulations are still so unclear. It really does feel like we’re being punished for engaging with a system that hasn’t been properly defined by regulators yet.
I also think it's important to have clear, fair regulations that protect people and allow us to navigate the system without fear of devastating tax consequences, no matter the country we live in. Hopefully, with enough advocacy, we’ll see better policies put in place to support investors rather than penalize them. Thanks for your well wishes!
What country?
Finland,
Did they knock at your door or did you previously go and declare profits and they just kept tracking you afterward?
I declared through a web service like koin.ly, but since they had some problems with what had happened on my account, I needed to consult legal professionals who weren't cheap, and who made my case worse. They also billed me up to 3000€, which I was supposed to be able to declare in my next year's statement, but was denied by the tax office thereafter.
Sad... I believe you would have been better if you hadn't declared anything. I read something similar a while back from someone in Sweden who said he regrets declaring profits from crypto because of all of the hustle. I prefer using crypto cards and spending my crypto or withdrawing cash at the ATM instead of withdrawing into a bank account. I did that in 2020 and 2019 for a while, but other than that I like to stay as far from the banking cartel as possible.
I get where you're coming from, but not declaring profits would only make things worse in the long run. It's tempting to think that avoiding taxes altogether might be the solution, but the reality is that the consequences of doing so can be far more devastating.
I do wonder sometimes if we'd be better off with a system where taxes were optional or at least more transparent — where you could choose to allocate your taxes to specific things and opt out of others. There are many areas I would gladly contribute to, but others come off as less justifiable.
Unfortunately, we're stuck in a system where taxes, especially with crypto, are rather unpredictable and burdensome. I guess the key is to push for better regulations and more reasonable tax policies rather than avoid them altogether.
There is one cool coin like XMR-Monero ☕🦊👌👌👌 when you start to follow it, you soon start see we all need it.
I did mention Monero in my post, but it is not a solution. The only real solution I see is reason in regulation. But attaining that seems quite difficult. I think people will need to raise the issue up and keep making noise about it. And yes, we need to speak for Monero too, not just Bitcoin, Ethereum, or Hive, or any other non-privacy coins. Privacy coins have their place too, as like in the streets, no-one really wants others to know how much cash they carry around in their wallets. It is a privacy issue, and not a crime.
if I'm honest, all these laws have to be eliminated that punish us with mega taxes. Because they clearly show that we have no right to our own values or lives, which is a grossly criminal behavior by a government that makes decisions for an elected party such as the banking mafia and clobalist billionaires.
But you have already answered, no one can see the contents of your wallet, so no one can do anything also because there is nothing to see 🤭👌👌👌😊☕🦊 ... XMR.
we can argue indefinitely, but this post is good here 🤭🤭😁😁☺ it was good to read it.
I'm not arguing; I'm saying that, the way things are going now, it doesn't matter if you have Monero or not. The mere fact of having a wallet or even talking about one could be treated as an admission of tax evasion, money laundering, or even funding terrorism.
Not all risk is worth taking risk. @gamer00 how can I reach out to you on discord.
Checked your wallet yet?
How we declare high volatile crypto as taxable assets. I never do that! Better you invest those at my country. At least it will remain unnoticed.
$WINE
I wish you will come out of a solution asap.