Tax compliance is a labour-intensive and time-consuming process, often involving a lot of paper work and professionals, thereby driving up costs. The tax payer would ordinarily collate, prepare, and submit their returns, also calculating and deducting their allowable where applicable, while the tax authorities verify, cleanse, and validate the returns before the process is completed. This process drives up costs and needlessly consumes the time of the taxpayers and the authorities. There’s also the unending battle between taxpayers and authorities in interpreting and applying tax laws, leading to indecision and risks of audits and even litigation.
Cryptocurrencies are not without their challenges however, for instance, they have exhibited periods of extreme volatility, which limits an asset’s ability to fulfill two of the classic functions of money to wit; to act as a stable store of value that people can hold and use predictably in the future, and to serve as a meaningful unit of account that can be used to assign a comparable value of goods and services.