Its stale news that world governments are finding it a herculean task getting cryptocurrency investors to pay their taxes. In the latest development, the fourth largest crypto exchange in the world, Bitfinex, is now working hand-in-hand with the government of the British Virgin Islands in a bid to clamp down on bitcoin tax evaders.
Bitfinex Tax Office
In a notice sent out to its clients, Bitfinex has made it clear that clients must compulsorily send in their tax information so that it will, in turn, give it to the British Virgin Island authorities who will share the same data with relevant tax authorities or governments of its users’ country of residence.
“Under the laws of the British Virgin Islands (which are applicable to entities organized in the British Virgin Islands, including us), we are required to report certain account information to the [British Virgin Island] government,” the notice read, adding “The government of the [British Virgin Island] may then exchange that information with the tax authorities of the customer’s country of residence.”
The notice further states that in addition to complying with the British Virgin Islands, the move is also consistent with the U.S Foreign Account Tax Compliance Act (FATCA) and the Organization for Economic Co-operation and Development Common Reporting Standard (CRS). As such, all clients, whether individual or corporate bodies, must fill in and submit the FATCA and CRS forms by May 24, 2018.
Bitfinex concluded the letter by reminding its clients that they have no choice but to comply with the directive because “by agreeing to our terms of service, you have agreed to use the website in compliance with applicable laws or regulations.”
Whalepool Condemns Bitfinex
Many have criticized the exchange’s move to succumb to the whims of authorities despite the detriment to customers. Whalepool, a multiplatform community of bitcoin traders, took to Twitter to lambast the exchange.
“Biftinex is now requiring users to give their tax information so that it can send it to [British Virgin Islands] 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,” it tweeted.
Binance coin (BNB) up over 6% in USD terms after Bitfinex tax crackdown email blast to clients.@cz_binance knows what crypto needs. sticking up for privacy and freedom for traders is essential. hopefully he has the courage to continue the good fight that others dont. @binance pic.twitter.com/lirIb1QkSJ
— Whalepool (@whalepool) May 17, 2018
Interestingly, Bitfinex is not the only crypto exchange that has been directed to hand over user data to the government. However, the fact that the company accepted the request without any resistance is quite disappointing to its customers and the entire cryptocurrency industry.
Notably, Coinbase has been in a legal battle with the United States Internal Revenue Service (IRS) since 2016, for failing to submit personal data of over 13,000 clients to the IRS.
Bitfinex has since stated that it only sent the letter to a select group of clients who “have an obligation to self-disclose,” adding that all those who did not receive the notice are not obligated to do anything about it.