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Your Responsibility to Outside Agencies


I am not a tax advisor.

I am not giving any kind of tax advice, nor am I presenting any kind of how to’s or what to do’s.

You must engage your own “tax advisor” in your jurisdiction. This Composition only offers several explanations of operations in the CRYPTOCOSM WORLD.

I was a certified financial planner and also a certified note broker. I have made contacts over the years with many professionals in the arena of offshore investments and accounts and been to many outside country conferences seminars on asset protection and types of constructs. Yes, certificates have expired.


Your DEX account and your CDAP account are Primarily WALLETS. That is they are a holding place in your name for the assets that you have produced. Nothing in those wallets are but the things you have produced or bought (say via buying BTS), Nevertheless, they are all the assets that you have produced through the Compumatrix system or bought with post-tax money and so as long as they are in those wallets they are not taxable events.

Let me give you an example:

YOU are an artisan – a painter artist….or – a woodworking crafts-person

You have painted several beautiful watercolor or oil paintings; OR

you have made with your hands and tools many small wood products, for example, wood picture frames or beautifully carved boxes for storing jewelry or even exceptional wood carvings to hang on a wall or set on a mantle.

OKAY, hopefully you get what I am saying, you see the picture.

Now you work out of a very limited space area so you go and rent a storage unit in which to store all those paintings or wood crafts.

There they stay in storage…..oh yes you have had expenses and the products do have value..….but absolutely no gain or profit at this point in time.

To get a gain or profit you will have to open your storage unit to someone else invite them in to shop and then “SELL” one of those stored items. (A PEER TO PEER transaction… at a price you determine. (a barter transaction)

NOW you have made a taxable event but only if you have exchanged the item with the shopper(buyer) for “fiat”. However, you do have the cost of the product and storage to deduct before you have the amount from that sale that is taxable.

I hope you get the picture here

BECAUSE both your WALLETS (DEX and CDAP) are just like that storage unit….while your assets remain in the WALLET there is no taxable event!!!

Now you can choose to take out of your wallet a certain amount of any asset and convert to a “fiat” transaction. Now you have created a taxable event per that particular amount of that asset.

ALSO IMPORTANT TO REMEMBER if you “send any part of your asset from your wallet to another person’s wallet (in our example above move from your storage place to another person’s storage place) that is not a taxable event either…..BECAUSE you did not convert it to any “FIAT currency”.*** Also good to always remember the word “decentralized” (no go-between agent or agency especially government).

Just like your “storage place” it was between you and storage place owner – no government interference.

Now if someone helps you manage your wallets, then you have a contract with them, and if at a cost then that is a deductible amount in the tax world. What we all need to do is to keep ACCURATE and good records WHEN we move our assets outside of the “wallet” to a designated value of other products or fiat conversion.

This is all part of the CRYPTO-ECO-SYSTEM world

It is not to be feared or become stressed out by.

Do not let professionals not well informed about this NEW ECO WORLD make you afraid because they lack real comprehension. Today the IRS and TRADE Commission still does not have a real grasp of it all.

This is what I would say to you hold on to your assets in your “STORAGE COMPARTMENT”. Do not take a huge loss because of fear. We will always be here to help you through any hurdles of misunderstanding
If any big hidden liability were to present itself to maybe cause members to fear and be threatened by be assured we would give an alert to everyone.

To clarify again….. I am not talking about “trades of crypto assets or loss and gain” because when you trade you are establishing value. Basically, you are conducting certain business activities.

AGAIN THIS IS ONLY A SCENARIO – to help understand the world of tax implications and/or events in the crypto eco-world. You still need to find a professional person (tax or such) in your jurisdiction that is knowledgeable in this eco world from whom to get advice.

Okay, hopefully, you are gleaning enough from my posting to understand the “strict” venue of “wallets” or “storage”.

Basically, you first store your product from which the only first engaged activity is the production of the asset and the cost thereof.

At this stage, there is not a taxable event because there is no establish event value. It is just inventory on your shelf. It is only at this moment in time, on paper, with only an ascribed supposed value. Because in time it can add or subtract value to itself in theory in your “wallet”. This is called “volatility”. This is basically a status for now on your inventory checklist.

However a business activity, that is, what one would call, a taxable event is if you do any kind of exchange, of any asset in your storage place, your wallet, to someone else for any kind of agreed compensation thus ascribing a market value at that moment to the asset. It could be “fiat” or any other item that has an understood acceptable market value. This activity is defined as a trade, a sale, a negotiated value, with gain(profit) or loss. “Gain(profit) or loss” is the differential between production and acquired cost to the sale invoice or receipt.

For example, you sell, exchange, convert any of your assets, paintings, or woodwork carvings to another person or their wallet for an agreed-upon value between the two of you.

Is this a P to P transaction, yes, it a taxable transaction? yes. Why, because there was an attributed value to the asset and the other party agreed to that value and made the exchange. It can still be a “Gain or Loss”

I have used a company that will accept BTC for silver or gold coins or even platinum. I then do a transaction with them from my wallet to their wallet. They get some BTC and I get some metal.

This is a P2P transaction (NO MIDDLE MAN) –yet it does have tax implications. P2P never meant no tax implication in its definition. It is only that it goes back to the similitude of the ancient times barter system. Today because it is blockchain related in the Crypto asset system and decentralized the only place of record-keeping is the blockchain – P2P and of course your infallible personal records. Why? Because some P2P do not have tax implications of any kind and then others do. And yet even others have the “gift” definition attached to them.

So in the strictest sense, P2P does not confer upon a transaction nullification of tax implication.

It simply cuts out the middle man, primarily the go-between entities. Therefore everyone must be responsible for their actions and be diligent in personal record keeping. Today it has become easier since you can take “snap it” pictures or other pictures right from your computer and then assemble that into the proper folder. When you do it this way though remember to take backups of the folder to store offline.

Also, be careful of any “tit for tat” negotiations. If the market value, the REAL market value not one you assume, of “tit” is the same as that of “tat” so that there is not a “gain” or a “loss”. Then it is a “zero” taxable activity. But if there is a loss or a gain then it does become a taxable event. However, in both cases, it should have a record showing on your ledger.

I know for many this may seem to be complicated and taxing on the brain. But the reality is that it is not. One just needs to always remember the door you are opening and to which room you are entering.

Why else would we be admonishing everyone to do very accurate paperwork on and offline? Do not make assumptions that in the end can cost money.

So the bottom line is that P2P and decentralization do not in any way remove the personal responsibility that any person has to manage with intelligence and understanding all their assets in the Crypto Eco World, the CryptoCosm**. It is a very real world of “Finance” just not the one we have been accustomed to because we have been so used to and accepting of the control that reserve banks, other banks, and financial institutions have for so long asserted their control of and over, especially all of us the peons.

With all this said, I trust for most you are getting a better picture of the cryptocosm dynamic.

Definition provided by online search pathway:

**Cryptocosm refers to the network of organizations, systems, companies, and individuals powered by blockchain technologies in which security and decentralization are primary features.

Compumatrix is part of the cryptocosm market

About the author

As President and CEO of Compumatrix and Networks International, David is responsible for running all facets of the business. David has a proven executive management track record and over 20 years of experience driving sales growth in various industries. Prior to joining Compumatrix, David was Chief Executive Officer for Morcab, Inc, responsible for all sales and marketing activities.


  1. Thanks David! I have the 4th edition of a Tax book sitting by me right now from a Law Group that I intend to work with once we roll this down the road. I have been studying this information for years! Most people curl up with a good novel. I curl up with a good “TAX” book! (And NO, I’m not a nerd! But I’m getting there! LOL)

  2. gotta love this to be first to reply — to a GREAT Post — David it is awesome that You put us in the perspective of being in the Business end and I do know for a fact that whether we be in P2P biz– or we are just working quietly in CryptoCosm biz –We are close to being finished and if we do right we will get to finish line and in theory Win–

    1. So sorry to crash your party! I am amazed that I was able tto get my reply in before you did! LOL

      Although as I stated above, I have been studying this for years, I know I am NOT the professional but I have sought out who I intend to work with. DO NOT rely on one source of information. One direction I am planning to work with, I am following 4 professionals in that field. I feel the same about this tax field. I have been following several resources for several years now and I will keep my mind open for more information!!!

  3. Having had similar qualifications to David in a previous life – Securities broker and financial planner – But in Canada (all expired as well), I absolutely agree with everything he says. In the USA. Other jurisdictions handle Crypto a little bit differently – And be SURE and check with 2 or 3 different professionals before deciding on a path to take, based on where you live, or reside – spend most of your time.

    Anything bartered in Canada, no matter what the value for value exchange, is not an INCOME taxable event, but MAY be a sales taxable event. Was it done under the commerce clause? Were forms filled out? Is the item received signed over to enter into government service? (registering a car is entered into government service) If I trade a box of wood for a pick up truck, there is no income tax on it, but there would be sales tax – ONLY applicable when the truck is registered with the government – if ever. :-). The guy that got the box of wood, will never have to pay taxes of any sort on it, even though it heated his home for a winter. It was never entered into government service it was used privately.

    A Canadian living abroad, say, in Belize, and is resident there, owes zero income tax to Canada as long as they don’t spend any longer than 6 months less a day in Canada. The tax laws of Belize apply. Because Belize has no income tax payable for business that is not performed in Belize, or money that is not earned in Belize, there is no income tax payable to Belize either. If the server any coins are held on and traded on is NOT in Belize, zero income tax. No matter what – Could be ebay and amazon sales.

    Point is – get the information from reputable sources for the country where you reside. Be it your birth country or elsewhere. Pay the tax that you legally owe, nothing more. (Pay as you go taxes – just pay them.. That is how communities are funded anyway – has nothing to do with income taxes.)

    Thanks Dave – very good information and well detailed for US based members. Most of it applies to many other countries as well. And yes, the IRS and other alphabet soup agencies there, waffle back and forth so much it’s insane. 🙂

  4. Wow, your job description is exactly what I am thinking about doing when I get older – I want to be a certified financial planner and also get a law degree. I think this advice is invaluable because protecting one’s money is crucial to sustaining one’s wealth. I do not know much about tax codes or tax law, but I need to do what other people are suggesting in the comments: get a book. I hear “Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes” by Tom Wheelwright is pretty good so maybe I’ll read that soon!

    1. @mrn520 I also purchased Tax Free Wealth by Tim Wheelwright. I’m not finished but he has valuable information to only pay the taxes that are owed and NO more! Do you work out of a home office, bought a new computer, office supplies etc he is helpful to us non tax advisers. The next few years are going to be ever changing in regards to how crypto is taxed. We need to be as informed as possible and keep up with the changes. These blogs will be a great addition to our tax tip learnings.

  5. Taxes taxes taxes I have known no one who rejoices when tax time comes around. (Except the IRS or MH -Ministerio de Hacienda- in Costa Rica)
    I know only one crypto-accountant in Costa Rica , so when I start my business , it is he I shall be in contact to be guided in the proper way to manage my tax obligations.

  6. A very good explanation and something to remember as we seek out our own tax person. It makes sense to me that until income is “realized” it is not taxable. I have heard several different ones speak on this very thing and David makes more sense than any of them. When I go to my tax person I will have lots of questions before he or she starts so I can determine that they know what they are doing and not just going by some “Play” book.

  7. Jennifer, I believe you are talking about Tom Wheelwright! My husband posted earlier a comment about this post. Tom Wheelwright is one of his favorites. I can say from him the book is a good read. I will crawl up with a novel while he crawls up with a Tax Book! Tom is one of the Rich Dad Advisors as well with Robert Kiyosaki. Everything from that team is great!

    Back to you David! Since you posted this today, it has been the topic of the day around here! I haven’t seen Stephen SO EXCITED ABOUT THE POSSIBILITY OF PAYING TAXES!

    1. This was a very informative blog. One in which makes me feel more comfortable in this world of ever changing tax law. My one question is, in the states, is this the same for centralized exchanges? Movement between exchange and wallet, I assume is not taxable as long as the crypto is not realized and converted to fiat for use? Thanks so much for this source. Please keep these coming so we can run our businesses accurately!

  8. it is part of that life I talk about Stephen — I thought out loud and I should have been just happy to be able to post to A great Blog Posting by David — and if I am to have a party crashed could not be by a better person — lol Stephen you keep writing your blogs also they are great also — and now I move to next one and re-read this one a few more times — rj

  9. Tax laws are so different worldwide and yes we must all do our own research as to what fits our world. The changes going on constantly forces all of us to continue our research in a diligent manner. We can’t read an article from 2009 and believe it fits our tax responsibilities today.

    David, I do agree with some of the comments that your explanation really helps the US members and some of the other countries. You have a way of breaking it down for those who need a “picture” story to get “it”. Staying up with different sources is great but staying up with government rules is absolutely necessary. The, “I didn’t know” won’t cut it if you are called in for not following government rules. Like it or not paying taxes today is not an option. Know what that obligation is does lie on our own shoulders.

  10. Good Post David and following replies by our team members. Let’s address the tax question and my answer.

    I just finished two seminars by some of the best offshore programs out there. Rule 1: “If you owe it pay it!” Why? You ask? You will not be able to hide. Too much of your information is already out there. Rule 2: Form an LLC or company and take advantage of the deductions.

    What happens to a hacker when they get caught? The go to work for the government agencies who want your money! No ifs, or buts. The old stories about then can’t see what I am doing are just that, stories.

    See a true professional once things start to move. Have the write-offs and most important make sure your bank is willing to accept funds every few days or they will report you to those government agencies. Also, keep those records as David says. When it comes to transactions, copy them and past into spreadsheets. When it’s time to pay the taxes I have one account that has nothing in it but the taxes. No shuffling around in April every year trying to find dollars to send to the IRS, it’s all there!

    This is really important when we start selling the VPC cards. Even a few sales every day will generate a lot of numbers.

  11. Having owned crypto for many years now, I have reported taxes on buys and sells for a long time. I must say that it is difficult to keep track of all of this, especially if I am transferring from one coin to another and then another, as each buy and sell requires report. I like the idea of taking pictures of everything I do and then printing them. Then if I add notes on top of that I should be in good shape, so thank you. It surely can’t hurt as it’s just one more way to redo the puzzle.

  12. Thank yor David for this clear and concise break down. This is a clear and precise breakdown of how we need to view our accounts and our accountability to our country’s governmental agencies. I am sure I need to read this article a couple more times to make sure that I have a full grasp of the concepts you have shared here. Once again, thank you!

  13. I know the tax laws in my country and very familiar with procedures. I don’t need any advice on that count. I was the state head of the department and retired from the government in a very senior position. I am waiting for my assets to get converted into fiat money because only then I will be able to use them. I can take care of my tax planning myself and I personally got acquaintance with very senior people in tax department, of whom some aere specialized in crypto tax.

  14. Thank you David for the informative information on paying Tax for crypto currencies.And yes there are many countries which are still trying to work out how to tax people owning Cryptos.
    We are still in the process of learning and will be looking forward to consulting our income tax lawyers for paying our taxes when the time comes.

  15. I again appreciate the offer of help and personal help from around the people of Compumatrix — I am still amazed by the amount business sense and even the legal and financial information available here — I am very much getting farther in my quest to learn as much as I can to better my own position — thank you sincerely — rj

  16. The blog is very useful information, David. I still have to talk with a consultant about my DEX and CDAP accounts. There are so many consultants and advisers, and it is the idea to find the right one, one who understands what Compumatrix is about and how the business model works and which activities are taxable and which not.

  17. Again, we have so much to learn. Years ago, Stephen wrote about a book he read that a father taught his son a valuable lesson about business. The lesson was about hiring professionals to perform certain duties in your business so you can spend your time making your business a success. We have the tools in place for a very successful business. However, we have to know our strengths and weaknesses. I have heard this in the past, “run with your strengths and outsource your weaknesses.”

  18. oh so very true Catherine — speaking from personal life experiences — if you do not know this or that then hire legit Pros — not going to get into too much history but when opening offline business it is truly best to have Legal and financial pros at your beck and call — unless you have 10+ years of legal and financial expertise in your resume’ — good business practices also means being Wise and Diligent in your business setup — jmho

  19. Thanks so much, David, a down to Earth explanation! Jody and I have talked to our tax person, and he and his team are ready when this takes off. I love the part of the transfer, or nonusage costs you nothing. Kind of like my sales tax, if I don’t buy it then I don’t pay it, so it is entirely up to the person who holds it. But, as with all things govt. or power structures there is always someone to answer to and the IRS is never one to try and deceive. Be honest keep good records and always have a professional helping it is money well spent.

  20. I will admit – I do not know much about taxes or tax laws. I hire a tax lawyer to handle my taxes each year. It is always good to hire someone who knows what they are doing and can file your taxes and tax returns so you don’t mess up. I might have to do what some of the other members in the comments are doing and read more about taxes in the future.

  21. I don’t really understand taxes very much so I hire people like you to advise me as best as possible on what to do with my wealth. I think that as the crypto world gains traction, there will be a whole new field of jobs revolving around crypto currency taxes and its laws. If someone doesn’t understand something well enough to do it themselves, either learn it or hire someone to do it for you.

  22. so much in agreement with your thought process Kami — that as this crypto world grows and becomes more and more prevalent in the happenings around the globe the more opps will be available and hopefully the legal end and govt. tax people will stay ahead of the curve and then be an asset we can use in our success quest —

  23. just got done reading another blog posting on this same stuff and depending on the individual aspect really does make a difference — there is parts of the business world I know and other parts I do not so depending on what type of business you may looking at doing the more you are comfortable doing the less professional help you should be looking at ?? just a thought — know your stuff but really make sure your Heart is in it before you start — also jmho —

  24. I came back to David’s article to refresh on the tax implications of our cryptocurrency transactions. Very good information. Good reminder that just because it’s a peer-to-peer transaction does not necessarily mean it is a non-taxable event. I’ll be sure to keep good records and hope I can find the right tax person when the time comes.

  25. Very well written article and explanation. I think this really simplifies how P to P works as also a very easy to understand description of taxable and non taxable. I think this will be a big help for many who read this and I know I will refer back to it from time to time when it becomes necessary.

  26. I like the explanation and all about taxes on crypto, though here there is yet much to be done where taxes are concerns for these of us engaged with cryptocurrency, we don’t have a clear way to declare what we earn but there is already a tax force formed to come up with laws concerning this.

  27. like that fact Vincent — govts. will always be there with their hand out — sad but true — and also so much in America anyways — will be dependent on If and this is a Big If did you Net Make a Profit or over the years has amount of time been spent in biz been calculated into the equation ?? know back when had offline biz that was always entered into my figures — will be here more than once great info here —

  28. Thank you David for clarifying when an asset is not taxable. It was clear and concise. I was thinking correctly but sometimes I doubt myself because these days I do not always remember all things that I read. Also, including how the P2P works was not sure if it was taxable or not now I know. I think I am set I have found a professional to help me when tax time comes.

  29. David, I appreciate your clear and understandable explanation of the taxable events. It does not seem so scary thinking about the IRS coming after us. I thank you, Erline, Gail and my mentor Kevin for instilling in me how to keep good records, concerning our new digital assets, even when I did not understand about the cryptocurrency. I just followed their instructions until things became clear to me. We need to be compliant and secure Thank you.

  30. I will leave it to the professionals I do not want to play ball with the IRS so I will leave it to them, I am still paying on my LLC and I think that is the safest way to go. I will pay them to protect me and send all my records to them. I think everyone should do this but that is just my opinion I know in the USA taxes is nothing to play around with they are relentless here.

  31. I will have to see if the way an investment house one can do the same with verve. It has been a study to find out how bank accounts like offset accounts work with tax and reduced the amount of tax that has to be paid. This area needs a good professional and now one versed in the crypto world.. It is an interesting area to watch.
    Thank you David for such an informative blog.

  32. Very informative blog David,compumatrix blog has opened many doors of learning,I have always paid taxes and we should do that,I’m not scared at all,I am part of such a strong company,everyone is here to help us,If we pay other taxes then there should be no problem in paying crypto tax,we have to follow these rules on how it will be paid.

  33. this is such a great read and thru the replies also –so much top info of so many different parts or aspects of the Crypto world and also the overall Biz world when you look at so many different thoughts — every thing almost that we do has implications in any govt. tax arena — so reading this keeps the info fresh and accessible — much thanks —

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