A share actually represents a legal piece of ownership of something.
If you own 1/4 of a cookie company and the cookie company goes out of business, you still get 1/4 of whatever is left over from the cookie business (in this case, probably some equipment and hopefully a lot of cookies).
But most crypto is not comparable to stocks. It's comparable to currency. Currency markets exist, and there is an awful lot of speculation in them. And a lot of currencies do fail! But the main difference is, if I buy a bunch of Swiss Francs, I at least know I have one person who will take it - the Swiss government. If I buy a crypto from a blockchain, will the chain buy it back? No.
But most crypto is not comparable to stocks. It's comparable to currency
Gary Gensler, the boss of the SEC, would probably disagree. He's calling most of it (with the possible exception of Bitcoin and Ethereum) a security (read "stock").
As to your point about "currency" -- it's not _really_ that either, chiefly because of the tax treatment in most countries that have crypto-regulation. If you buy some foreign currency, it goes up, and you sell it, you are NOT taxed a capital gain.
If you buy crypto, or stock, or bonds, or real estate, it goes up, and you sell it, then you are liable for CGT. This makes crypto more akin to a digital asset, or a commodity.
I can see where they are coming from. In the long term, the value for most crypto as a technology is it's way to decentralize ownership. But for the purpose of making an investment decision in cryptos right now, the vast majority of them really only derive their value from their usefulness in transactions.
If you buy some foreign currency, it goes up, and you sell it, you are NOT taxed a capital gain.
Am I misunderstanding something? I thought Forex gains were taxed via the 60/40 rule.
Comments
A share actually represents a legal piece of ownership of something.
If you own 1/4 of a cookie company and the cookie company goes out of business, you still get 1/4 of whatever is left over from the cookie business (in this case, probably some equipment and hopefully a lot of cookies).
But most crypto is not comparable to stocks. It's comparable to currency. Currency markets exist, and there is an awful lot of speculation in them. And a lot of currencies do fail! But the main difference is, if I buy a bunch of Swiss Francs, I at least know I have one person who will take it - the Swiss government. If I buy a crypto from a blockchain, will the chain buy it back? No.
Gary Gensler, the boss of the SEC, would probably disagree. He's calling most of it (with the possible exception of Bitcoin and Ethereum) a security (read "stock").
As to your point about "currency" -- it's not _really_ that either, chiefly because of the tax treatment in most countries that have crypto-regulation. If you buy some foreign currency, it goes up, and you sell it, you are NOT taxed a capital gain.
If you buy crypto, or stock, or bonds, or real estate, it goes up, and you sell it, then you are liable for CGT. This makes crypto more akin to a digital asset, or a commodity.
I can see where they are coming from. In the long term, the value for most crypto as a technology is it's way to decentralize ownership. But for the purpose of making an investment decision in cryptos right now, the vast majority of them really only derive their value from their usefulness in transactions.
Am I misunderstanding something? I thought Forex gains were taxed via the 60/40 rule.
Stock is only one kind of security. Security is anything you can trade. A dollar bill is a security, for example.