Bitcoin
Bitfinex Is After Your Tax Data For Crypto (BTC, ETH, LTC, XRP) Income Tax Purposes
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.
Bitfinex notice on Tax information
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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Bitcoin price dumped hard on Monday, briefly slipping below $41,000, erasing gains recorded in the previous week. The premier cryptocurrency seems to have exhausted its recent rally propelled by industry vulnerabilities. At the time of writing, the world’s largest cryptocurrency was trading slightly lower at $41,385. Bitcoin’s total market cap has dipped by 2% over the past day, while the total volume of BTC tokens traded over the same period climbed by 58%.
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Bitcoin price has been facing retracements and a rollercoaster over the past few days after recently rocketing to a 20-month peak. On-chain data has suggested that many investors used the opportunity to take some profits, leading to a decline in the asset’s price.
Bitcoin’s price slump is mirrored in the wider crypto market, with the global crypto market cap decreasing by 1.85% over the past 24 hours to $1.55 trillion. The total crypto market volume has increased by 32% over the same period. The Crypto Fear and Greed Index has plunged from a level of extreme greed to a greed level of 70, suggesting a decline in risk appetite.
Ethereum, the largest altcoin by market capitalization, is currently trading at $2,167, down almost 3% for the day. Meme coins have been hit hard by the market slump, with Dogecoin and Shiba Inu down by more than 4% over the last day.
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The crypto market has been buoyed by the Fed’s latest interest rate decision. The US Federal Reserve on Wednesday held its key interest rate unchanged for the third consecutive time, in line with market expectations. With the easing of the inflation rate, members of the Federal Open Market Committee (FOMC) voted to keep the benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%.
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