Staking is taxable too.
UK HMRC (Her Majesty’s Revenue and Customs) has just updated their guideline on the taxation of crypto assets. Staking is now defined to be taxable and its wording is almost same with the taxation of mining.
Are taxes high or not? It is all that matters.
Well, people are generally OK with the taxes as long as they are not very high. But why should we assume that taxation of our crypto assets is fine? In order to answer this, let’s first look at the historical roots of taxation.
Tax is a price we pay!
In ancient times, taxes were collected mainly to finance wars. Today as wars are quite rare, taxes are being collected to provide and improve public goods and services. As Oliver Wendell Holmes, Jr. once said “Taxes are the price we pay for civilization.”
Coming back to the question about taxation on our crypto assets, I would rephrase this quote as “Taxes are the price we pay for the insurance of HODLing.”
It is tricky I know, but let me explain: We generally insure something we already own (our car, home, health etc.) for any unknown risks in the future. Once insured, the insurance company will never want you to have a damage or total loss on what you own. Same applies to crypto space. When you are HODLing, the biggest risk is the possibility of a future ban which can be enforced by your government only. Most probably in order to defense their shitty coins. But anyway, when you are taxed, your government now becomes your insurance company. It is my simple logic that, for collecting their portion i.e. the tax in this case, the government will never want you having a total loss on what you own.
So still feeling annoyed with the taxes on your crypto? Simply don’t and HODL!