Yea, what I don't understand is how something like using ETH to buy another coin should be taxed? I totally get converting it back to dollars and calling that capital gains but trying to tax conversions from one to another seems nutty to me.
If I buy 1000 of USD with 1000 CAD, with the expectation CAD will fall, then since my taxes are due in CAD in my case, when I sell those USD for 1500 CAD I've realized a gain of 500 CAD that would be considered taxable income. But if CAD goes up and I have to sell those USD for only 500 CAD, then I've realized a loss of 500 CAD and I could deduct it on my taxes.
Seems reasonable enough to tax currencies like investments when they're used as investments. Any asset held in that manner usually would be taxed like that.
I know this because we did such a trade with another fund.
Swapping one crypto for another is the same thing, the fact that fiat isn't involved doesn't change much in this scenario.
Here we're talking about something different, which is an individual trading one form of crypto for another and showing how the same trade donew ith stock would be taxed similarly if you just swapped stock with another trader.
This is the core of the whole issue; IRS (and similar bodies) are deciding what crypto "is", at least for tax purposes (as is their purview). That has implication for how and when things are taxed.
speculation is treated differently to full-time trading, which is in term treated differently to trying to make some money on the side
All this goes away if there's automation and agreement among the exchanges. Of course, for those with wallets, I'm not sure what the solution there is. I'm guessing there should be some software one can use to track transfer times + prices and aggregate that, based on address... or something.
Sounds like an awesome financial strategy! Sounds like someone could make a whole bunch of money doing this.
But they aren't. Nobody is doing this. Even though, there would be a huge amount of money to make, from doing it.