Bitfinex’s tax warning sparks angry responses

One of the world’s largest crypto exchanges, Bitfinex, may have sparked something of an exodus due to its attempts to rein in tax avoidance. 

Bitfinex, it would appear, is dropping in to line with authorities on its native British Virgin Islands, and aiding their attempts to reduce crypto-related tax avoidance. In a message sent out to many, but apparently not all, of its users it outlined their requirement to submit their tax information – which, it made clear, will then be handed over to British Virgin Island (BVI) bureaucrats so that it can be passed on to other governments around the world. The announcement sparked ire among some, as this tweet below reflects.

 

The fact that the announcement specifically mentions compliance with US law and the Common Reporting Standard – a G20-driven initiative from the Organisation for Economic Co-operation and Development (OECD) launched in 2014 that obliges jurisdictions to obtain and automatically exchange financial information – implies that there has been some outside pressure put on the BVI to rein in such activity, perhaps in light of the seemingly extensive under-reporting of crypto assets in recent US tax returns. That is not explicitly stated, however, and – as Bitfinex states – it is something that its users have signed up for in advance by agreeing to “use the website in compliance with applicable laws or regulations.”

Bitfinex’s apparent decision to acquiesce to BVI requests is in contrast to Coinbase, which has been in court to stop the US’ Internal Revenue Serive accessing data on 13,000 clients. The company did respond to Whalepool’s tweet decrying the move, by pointing out that the message was only sent out to people who “have an obligation to self-disclose”:

However, the group of crypto investors behind Whalepool – or at least whoever had the account at the time – was having none of it. Instead, it decided to twist the knife a little more by pointing out that Binance’s coin (BNB) has shot up 6% in value since the news first broke.

Its opinion, however, pits its seemingly more libertarian take on the crypto world against increasing calls from both inside and outside of the industry for tighter regulation and an end to the ‘Wild West’ character of the market.