[georgehm]

Why? Here the asset used as collateral is a commitment to return the money if the loan isn’t repaid. Imagine I bought gold back when gold was 100$ , it’s current price is 1000$ and now I use it as collateral to get a loan . How is it fair that I have to pay taxes on 900$ of unrealized gains ?

[notyofriend]

By using as collateral you realized the gains because they became tangible and usable.

[georgehm]

No they didn’t because until the loan is repaid you can’t use whatever gold you put up for other purposes can you. What became tangible is what you used the loan for , that is what can be taxed.

[fxd123]

Collateral is explicitly not tangible and usable. The whole point of collateral is that the unrealized gains are held in a illiquid limbo