The problem shows up on my tax claim in my country. I can't by 12 Lambos and say oh I have earned them with my 3000$ sallary (I have 900$ sallary and average in my country is 450$).
They will ask how did you get it. If I say I earned on investment in crypto, they will not recognize crypto and then what. Bank statement ,,I got it from that account'' is not gonna work.
The question remains how did I earn it.
And how did a prostitute earn it? How did a gambler earn it? There are situations where you simply can't register a business and get an accountant to keep the books.
In some cases you simply earn money from sources that the government doesn't want to recognize, but as long as you are not a criminal and pay taxes the bank has no right to hold your money without processing it. They can refuse to service you, but they can't take the money or claim it was obtained illegally.
I wouldn't worry too much since this is a free and open market. If one bank doesn't process it another one will, just make sure to let people know which bank is making difficulties so that people don't waste time with them.
How the government can differentiate me from drug dealer, illegal weapon dealer etc? They don't know what is the cryptocurrency, well they know but the law doesn't know. A prostitute will not buy 5 houses and 2 Bugatti's or Lambos. Prostitute will not have the same problem. Let's say I want to cash in a large amount of money, millions.
Example. What if I try to cash in my 100 million dollars worth of crypto. You think that I will not pay nothing for it, I don't think so. But paying a tax for my 100 mil is not a problem. The problem is where did I get it.
Ok I bring the big guns now. I did not want to do it, but here it is...
https://youtu.be/vT8OU5WtfkQHehe lol
So yeah money laundering
For the guy in the question above @bitcoinmasterlord.
We have to pay taxes on the products alone.
1.You buy a new iPhone, you pay around 20% tax for it (percentage differs from country to country)
2.If you have a company that makes a software or cars or bear or whatever and you sell those products you will pay tax on it.
3.For selling those products you have earned 100k or 1 million dollars in one year and now you must pay yearly tax income (Tax notice for the determination of annual tax). In my country if my income exceeds above 20k dollars I pay 10% tax, if my income exceeds above 40k dollars or above I pay 20% tax. If I don't give them my notice they maybe not react at all, but if they do they will give me such a fine and my head will hurt badly.
Average sallary in my country is 450$.