If you’re a US-based customer of Coinbase, the short answer is yes, you will have to report Coinbase on your taxes. The reason for this is that Coinbase is considered a money services business (MSB) under FinCEN regulations, and as such is required to report transactions to the IRS.
This means that if you’re buying, selling, or exchanging cryptocurrencies on Coinbase, the company will report your transactions to the IRS. And depending on the size and frequency of your transactions, you may be required to pay taxes on your gains.
So if you’re using Coinbase to trade cryptocurrencies, it’s important to be aware of the tax implications. In this article, we’ll take a look at some of the key things you need to know about taxes and Coinbase.
What is Coinbase?
Coinbase is a digital currency exchange that allows customers to buy and sell cryptocurrencies. The company was founded in 2012, and is one of the most popular exchanges in operation today.
Coinbase allows customers to buy and sell four different types of digital assets: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. The company also offers a wallet service, which allows customers to store their cryptocurrencies offline in a secure environment.
Coinbase is available in 32 countries around the world, and has over 20 million customers. In 2017, the company processed $1 billion worth of transactions per day.
Is Coinbase Regulated?
Coinbase is a regulated company. In the US, Coinbase is registered as a Money Services Business (MSB) with FinCEN.
This means that Coinbase is required to follow all applicable lAWS and regulations relating to money laundering and terrorism financing.
In addition, Coinbase is registered as a broker-dealer with FINRA, and is also a member of SIPC. These registrations protect customer funds in the event that Coinbase were to become insolvent.
Coinbase also has licenses from various state regulators, including the New York State Department of Financial Services (NYDFS). These licenses allow Coinbase to operate in specific states within the US.
What Are The Tax Implications of Using Coinbase?
The tax implications of using Coinbase will depend on your country of residence and how you use the platform. Generally speaking, if you’re buying or selling cryptocurrencies on Coinbase for investment purposes, you will be subject to capital gains tax.
This means that if you sell your cryptocurrencies for more than you paid for them, you will owe taxes on the difference.
If you’re holding your cryptocurrencies as a personal asset (e.g., for personal use or consumption), you may not be subject to capital gains tax.
However, this will depend on your country of residence and its specific tax lAWS. It’s always best to speak with a tax professional to determine whether or not you owe taxes on your cryptocurrency holdings.