Clearing the Air on Misunderstandings Surrounding Crypto Taxes

• MetaMask does not interfere with users’ capital tax gains but retains the right to withhold taxes regarding users who purchase its products and services.

• The non-custodial crypto wallet takes pride in more than 30 million global users.

Amid cryptocurrency mainstream adoption, countries around the world are formulating and introducing tax policies. The rise of crypto-related firms has significantly reduced the growth prospects of the traditional banking sector. As a result, governments have been left with no choice other than to regulate the cryptocurrency market for safer adoption. However, different countries have already enacted different crypto tax policies, which could significantly impact the level of foreign and local investments they attract. 

Worldwide governments have been working closely with centralized exchanges, which account for the largest crypto trade volume, to enact their respective tax policies. As a result, most crypto users have opted to use decentralized exchanges and non-custodial wallets to ensure maximum profits.

However, such days also could be numbered as governments have begun looking into non-custodial wallets for enhanced taxation schemes. Already, the top crypto wallets that are non-custodial are owned by heavily regulated entities including Binance, and ConsenSys Software Inc.

MetaMask on Tax Policies

MetaMask is the leading non-custodial crypto wallet on the Ethereum ecosystem that was developed by ConsenSys Software. Moreover, the MetaMask platform takes pride in more than 30 million global users. With MetaMask, users can buy, store, send, and swap crypto tokens including NFTs with immense liquidity from different blockchains. As a result, the MetaMask platform through ConsenSys has been approached by different tax regulatory agencies as countries struggle with heightened debts.

In a bid to stay true to the crypto course, MetaMask has left the tax issue to the responsibility of each user. Nevertheless, a statement in the company’s terms of use has left most users confused. 

Notably, MetaMask noted that it reserves the right to withhold users’ taxes unless otherwise stated. The statement left space for huge speculations amid increased crypto regulatory push, especially from the United States.

“Taxes. Each party will be responsible, as required under applicable law, for identifying and paying all taxes and other governmental fees and charges (and any penalties, interest, and other additions thereto) that are imposed on that party upon or with respect to the transactions and payments under this Agreement. All fees payable by you are exclusive taxes unless otherwise noted. We reserve the right to withhold taxes where required,” MetaMask noted in its terms of use.

In a bid to clarify MetaMask’s statement, Glassnode’s crypto tracking platform noted the controversial tax clause only applies to users who purchase products or services from MetaMask. Such services include crypto purchase and swap that requires the user to interact with the company’s liquidity program.

2/ It only applies to users who purchase products or services from MetaMask. If you do not purchase any products or services from MetaMask, then this tax clause does not apply to you.

— Accointing by Glassnode (@accointing) May 21, 2023

In this regard, MetaMask does not interfere with the users’ capital gain taxes as many had speculated.

Market Outlook

The Ethereum ecosystem is heavily reliant on MetaMask for future growth prospects. Moreover, retail users help DeFi protocols remain afloat, especially during crypto winters, through token and NFT purchases. Notably, MetaMask intends to attract more users from hardware wallet Ledger, which has been accused of preying on users’ recovery key phrases through a third-party backup system.

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