News reaching Global Coin Report indicate that popular online cryptocurrency exchange, Bitfinex, is adding a new requirement in its KYC (Know Your Customer) procedure. Select Bitfinex users are now being requested to submit their tax data. The data will be kept in their records to be submitted to the corresponding jurisdiction when the time warrants it.
Bitfinex is coincidentally registered in the British Virgin Islands that is known for being a tax haven. This current development looks contrary to the Exchange’s own vision of operating within a jurisdiction that is very lax when it comes to taxation. However, according to the announcement below, the British Virgin Islands might have made adjustments to its requirements and procedures specifically for tax enforcement by the IRS in the US. Below is the announcement that greeted some Bitfinex users when they logged onto the site.
According to Wikipedia, the British Virgin Islands has:
- no capital gains tax,
- no gift tax,
- no sales tax or value-added tax,
- no profit tax,
- no inheritance tax or estate duty, and
- no corporation tax
However, this new requirement might be targeting users in the US as earlier mentioned, for the IRS has expressed its wishes to collect taxes on cryptocurrency trading. Earlier this year, the American tax agency reminded Crypto traders that digital assets are considered as property and should be declared when filing their annual returns. The IRS was also quick to announce that the regular penalties and interest will apply to anyone who will be found not declaring cryptocurrencies in their returns.
With respect to Bitfinex, the above announcement has created quite a storm on Twitter with a boycott being advised by many users of the platform.
@Whalepool, which is a crypto community of day traders, had this to say about the announcement by Bitfinex:
“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”
The Bitfinex team was quick to reply with the following tweet:
“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 needs _not_ self-certify anything to us at this time.”
With the above development on KYC procedures on Bitfinex, crypto traders can decide to boycott the exchange by moving their funds elsewhere or opt to comply with the new requirement.
Another option would be for the Bitfinex exchange to register in another jurisdiction that does not require similar KYC requirements on Tax data.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
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