Cryptocurrency exchange Bitfinex has told customers they must submit details of their tax affairs, which will be retained and ultimately shared with tax authorities around the world.
The exchange, which has traditionally been known for being amongst the most discreet with customer details, has sent shockwaves through the cryptocurrency community with the announcement, a copy of which was obtained by news.bitcoin.com, which could ultimately pave the way for tax enforcement in multiple different jurisdictions.
Based in the British Virgin Islands, Bitfinex has been regarded as the preferred choice for investors looking to keep their affairs private. Until recently, the firm didn’t even require users to complete basic Know-Your-Customer (KYC) procedures, making this week’s announcement even more surprising.
The new KYC requirements have been sent to a cross-section of their customers by email, including the condition that Bitfinex “may then exchange that information with the tax authorities of the customer’s country of residence.”
This could lead to prosecution and even persecution in some cases, where laws relating to cryptocurrency transactions are strict. After an initial outcry on Twitter, Bitfinex attempted to calm the storm, commenting that the email was sent to “targeted users that we believe have an obligation to self-disclose.”
We have not sent this message to all users. We have deliberately targeted users that we believe have an obligation to self-disclose. If a user has _not_ received a message from us, she need _not_ self-certify anything to us at this time.
— Bitfinex (@bitfinex) May 17, 2018
However, the response has done little to ease the anger felt by their customers, with many now making arrangements for a full boycott of the Bitfinex service.
Bitfinex is now requiring users to give their tax information so that it can send it to BVI which will exchange it with your country's tax authorities.
We strongly disavow.
If you also disagree with this decision, peacefully protest it by withdrawing your money from Bitfinex pic.twitter.com/VkYchg3sqg
— Whalepool (@whalepool) May 17, 2018
Cryptocurrency users are already amongst some of the most closely watched investors in the world, subject to an ever-increasing burden data sharing and compliance. Many Bitfinex customers now feel the demands have gone too far, with others highlighting the irony of an exchange operating out of a tax haven suddenly becoming keen to comply with international tax authorities.
The news reflects the tightening grip of regulators worldwide over cryptocurrency transactions and the platforms, like Bitfinex, that serve them.
In Bitfinex’s defence, the exchange’s decision may have been due to the changes in the laws of the British Virgin Islands. However, even in spite of the lack of wiggle room Bitfinex apparently has over the issue, it looks like a sizeable percentage of their customers might now turn their backs on the platform.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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