Cryptocurrencies have the potential to become a good substitute for conventional settlement processes. The reason being they are underpinned by blockchain technology, which finalizes the transaction in an instant without involving any intermediaries. A few players involved in cross-border money transfer believe that cryptocurrencies and blockchain technologies can complement the remittance processes.
The combination of increasing cross-border transactions and declining correspondent banking relationships further highlights the significance of blockchain for lowering the cost of remitting funds and making the transfer across the border much quicker.
According to the latest report by the International Association of Money Transfer Networks (IAMTN), cross-border transactions can be settled in an instant, and thus, the need for pre-funding accounts in the receiving countries is redundant. Also, it is an expensive practice for remittance providers. The report further states that a lot of businesses from conventional remittance service providers to crypto fintech are leveraging blockchain to enhance the remittance process.
The report also includes the thoughts and views of renowned industry leaders on innovative technology, which can encourage the process of sending funds across borders. As mentioned in the report, both cryptocurrencies and blockchain experts are benefitted with infinite potential in the realm of cross-border payments.
Other technologies that have the potential to revolutionize the remittance process are artificial intelligence (AI) and application programming interface (API). Other than disrupting the financial sector, these innovative technologies can improve the cross-border payments infrastructure permanently.
Regulatory Uncertainty Slows Adoption of New Technologies
Despite the potential of the new technologies, the report also states that remittance service providers that are eager to integrate these technologies into their operations often face challenges to rigid national regulations. The fact that only a handful of countries regulate the use of blockchain leads to a certain level of uncertainty for organizations that use or are willing to use this technology.
The report also mentions the barriers that work against the new technologies such as lack of awareness, accessibility, literacy, and trust. These barriers also make the technologies unattractive even when they could result in significant savings. Therefore, policymakers should tailor their solutions with these barriers in mind.
Is Crypto Taxable When Received as Payment?
Coinbase offers a service, which sends money internationally. The instant transfer service comes with zero fees when sent to another Coinbase account. If money is sent to an account outside of the platform, a small fee is charged.
Well, this is about sending crypto across the border, but companies such as Microsoft, Tesla, Expedia, and WeWork have started accepting payments in cryptocurrencies. If they receive payments in crypto from other countries, they have to pay taxes on this because receiving cryptocurrency as payment for a service is a taxable event.
So, is crypto taxable when received as payments? If the companies are headquartered in the US and receive payments in crypto from some other country, they have to pay taxes on the coins.
Blockchain and cryptocurrencies are both revolutionary technologies that have disrupted the financial sector. These technologies have the potential to become a good substitute for conventional settlement processes. However, due to a lack of awareness, accessibility, and regulatory issues, integrating these technologies has become harder for remittance derive providers.
Do you have to pay taxes if you pay with crypto?
Yes, if you pay for anything with cryptocurrencies, it is a taxable event. Other than that, if you sell crypto for fiat, trade cryptocurrencies, use crypto to buy goods or services, or receive crypto in exchange for goods or services, it is a taxable event.
Do I need to pay tax on crypto profits?
Yes, you’re liable to pay taxes if you earn an income through selling or exchanging your crypto tokens. However, on holding tokens, there is no tax. But, if you hold for more than a year, you may have to pay long term capital tax, according to your region.