Stablecoins: Avoid Fluctuations and High Tax
Crypto markets are highly volatile. There is a constant fear of loss especially when you are a professional who accepts payments in cryptocurrencies. Even if you hold crypto to expectations of gains, you will still have to pay hefty taxes on them.
Starting from April 2022, your cryptocurrency gains in India will be taxed at 30% flat, without the scope of any adjustments even if you make losses in other cryptocurrencies. Many other countries like Italy(26%), France(up to 45%), and Germany also have high taxes on crypto gains.
But what about those who get paid in crypto like:
- freelancers
- media influencers
- social media managers
- bloggers
- affiliate marketers
It would be difficult for them to accept payments due to additional tax calculations. Here’s a solution that you can use to avoid any capital gains or even losses in cryptocurrencies.
Stablecoins
Stablecoins have huge popularity in cryptocurrency markets. The most popular is the USDT. It is pegged to the value of 1 US Dollar. Their values do not differ more than 1-2%. Further, that value rotates around the value of 1 USD. Other stablecoins are:
Accepting payments in Stablecoins
People started accepting cryptocurrencies as payments due to hefty charges while converting foreign exchange into local currency. In India for a USD payment of $150, you end up receiving only $133. Further, the currency exchange rates sometime are so volatile that you might end up receiving lower cash than your expectations.
Accepting payments in crypto consume much fewer charges. You can accept payment in stablecoins or quickly convert your payments into them. This way will make your crypto gains very less, on which you can easily pay tax. That tax will be minuscule as compared to your income tax.
Adding Stablecoins to Portfolio
JP Morgan, one of the key leaders in the financial world, has an opinion that cryptocurrencies have limited upside going forward. If such scenarios occur, then many people will pull their money back from cryptocurrencies which then might fall in value. Stablecoins could protect your portfolio against such fluctuations. Converting a decent part of your portfolio into stablecoins can not only give you stability but also provide you relief from any market corrections.