Benefits Governments Would Realize if They Adopt and Tax Cryptocurrency

Governments serve a huge role in society. Many people try to air out their grievances and state how the government in their country has failed them, which as citizens are entitled to better services from the government. An effective government plays a huge role in society and helps people and businesses in the country to have better performance in society. They help develop infrastructures that empower people to develop businesses and create job opportunities. Apart from this, governments also provide citizens services that help ensure security, health, and well-being among the people living in their jurisdiction. Some of the complaints might be valid, but people who complain about paying their taxes while others avoid paying taxes might be causing problems without knowing. The taxes collected in the country are used to provide services and to pay for infrastructure in the country.

This article is meant to show the government the benefits of legalizing cryptocurrency and adapting the cryptocurrency as a legal tender. Currently, El Salvador is the most common country that has legalized cryptocurrency and adopted it as a legal tender used for trade. The benefits that have been realized have helped the country create more revenue and avoid a lot of trouble and cases due to cryptocurrency being used for illegal activities.

The first significant benefit of the African government adopting and legalizing cryptocurrency is that it helps people make profits from the investment they make in cryptocurrency. Like any other investment made, the law states that people should pay a certain percentage of their profits as taxes to their countries. This fraction should be small enough not to make people fear getting involved with cryptocurrency.no matter how small the percentage might be, that will be additional income for the government. Combining taxes from many investors since more people will be motivated to invest in cryptocurrency, the government might earn enough money to fund projects that might have significant impacts on the citizens’ lives or help improve cryptocurrency investment in the country.

Some of the people who might be taxed include; the first are investors who buy cryptocurrency tokens as a store of wealth and gain interest rates from their investment. A good example of this is the upcoming Ethereum upgrade titled the Merge. The Merge will turn Ethereum from proof of work to proof of stake and introduce investors called validators, which will have to invest a minimum amount of $110,000 as their stake. They will earn an annual interest rate which can be taxed to help the government. Some countries in Africa, such as Nigeria and South Africa, already tax traders on their profits from their trade.

Africa has grown the cryptocurrency adoption rate by over 2500% in the last few years. Many of the people who have adopted cryptocurrency in the continent are involved in peer-to-peer trading and make good money from the trade. If governments legalize and regulate the trade, more governments will be able to earn taxes from the trade. The money can improve the country’s infrastructure or pay the huge debt African countries have to avoid the debt trap.