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.