💸Transfers Between Wallets
Last updated
Last updated
Although much of the crypto-sphere is different to traditional finance, core principles of ownership and security stay the same, elevated with crypto through self-custodial wallets.
A wallet can be seen as synonymous with a bank account, where one stores their currency for safekeeping. Hot wallets on centralized exchanges, where the user does not have sole ownership over their crypto assets, are the most similar to traditional bank accounts.
However, in the crypto-sphere, creating self-custodial wallets through dApps like MetaMask is a lot simpler than opening a bank account or multiple exchange accounts, as they both require KYC (Know Your Customer) information and identification.
The principle, however, remains the same: Transferring currency between 'wallets' that you own.
As you would transfer fiat currency from one bank account to another, no tax is owed when moving crypto assets from one wallet to another.
Bandile owns five Bitcoin across multiple wallets and wishes to consolidate all his crypto assets into a singular cold-storage ledger.
Making over ten transactions, Bandile compiled all five Bitcoin into a singular wallet that he then sent to his ledger to keep in cold storage for many years.
Having moved crypto assets that he already owned into wallets entirely owned by him, Bandile suffers no tax liability from his actions and only will if and when he decides to dispose of any of his Bitcoin.
[Image of user transferring coins or tokens to another wallet, as if you would with a bank account]