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16 November 2020 03:00 AM - edited 16 November 2020 03:03 AM
XYZ is an onlin P2P crypto lending platform which connects potential crypto lenders and borrowers to each other via facilitating a lending marketplace. Users in this market are able to advertise they are crypto lenders or borrowers, and as such, they can specify certain conditions and criteria, such as what crypto is offered for lending, for how long, what crypto will be accepted as collateral and the rate of interest to be paid. So, for example, a lender might say they are willing to lend 1 BTC for a period of 6 month and they will accept ETH as security, with the interest rate being 15% per anum. Usually an LVR is also specified, meaning only up to a certain fraction of value of collateral (in dollar $$$) will be available for lending. For example,
Crypto-For-Lending Accepted-Collateral Duration Interest
-------------------------- --------------------------- ---------- --------
BTC ETC 6 month %15
If during the lending period, the price of the security crypto drops too much, more security must be added as collateral. Otherwise, there will be the risk of forced liquidation of the security. Adding more collateral means going to the web site and authorizing the platform to transfer the additional crypto from the borrower's wallet.
Once there is an offering on the marketplace, an interested party can take the offer, in which case a binding contract will be executed automatically using smart contracts, and as a result, the agreed collateral crypto will be transferred from the borrower's wallet to the platform in order to be held in there, while at the same time, the lending crypto will be transferred from the lender's wallet to the borrower's wallet.
Lenders and borrowers have personal crypto wallets but they must have been given permission to access to their wallet during connection to the platform.
Here is what happened to me when used this website in the past:
I ended up keeping 5 ETH and losing (2600 + 200 - 189)= 2611 ABC tokens.
How should I put these gains/losses in my tax return?
Would it be correct if I said that I:
Would the above be correct?
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