Tax Crackdown on Bitcoin

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June 25th 2022
Tax Week 12
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Tax Crackdown on Bitcoin

Treasury worried Bitcoin is being used to launder money and avoid tax.

Bitcoin, the decentralised peer-to-peer currency, has allowed anonymous digital transactions since it was introduced in 2008. The core design of the network allows no central authority to control it and transactions are verified using a distributed database where transactions cannot be reversed, accounts frozen and, compared to traditional banking, there are lower fees.

The anonymous nature of the currency has seen it backed by people championing privacy but it has also been embraced by the darker aspects of the wider Internet, with the use of Bitcoin and other crypto-currencies to purchase goods and services on the so-called 'Dark Web'.

The Treasury has now outlined plans to regulate the currency due to fears that it is being used to launder money and evade tax. As of writing, the total value of the Bitcoin in distribution is over £145 billion. EU-wide rules to regulate are to be introduced by the end of next year (2018) and are being sought to apply counter-terrorism and anti-money laundering rules to digital currencies.

The new rules will seek to unmask traders dealing Bitcoin and other digital currencies. Official channels where Bitcoins can be traded and exchanged will have to log customers and report anything outside of the new regulatory boundaries.

The news of regulation has already stifled the growth in value of Bitcoin, albeit temporarily. Bitcoin, trading at 750 USD just one year ago, was going through a sharp increase in value - reaching 11,715 USD per coin as of Sunday night (3/12/17). Once news broke of regulation being brought in the value had a sharp fall to 10,911 USD over the course of two hours. Values have since recovered to 11,348 USD.

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