Prominent cryptocurrency exchange platform Bitfinex has given users until 24 May to confirm their tax status in order to continue using the platform’s services.
BVI legal requirements
According to a message account holders found when they logged into their Bitfinex accounts, as a company operating in the British Virgin Island (BVI), local laws now require that the tax information is collected. The details collected then may potentially be shared with the government of the users home country, should BVI law require it.
The message reads: “Pursuant to BVI law, we are required to obtain self-certifications from our customers in order to ascertain each customer’s tax residence… [we]may then exchange that information with the tax authorities of the customer’s country of residence, consistent with British Virgin Islands law, the U.S. Foreign Account Tax Compliance Act (FATCA), and the Organisation for Economic Co-operation and Development Common Reporting Standard (CRS).”
Centralization of exchanges
While it is crucial to provide legal regulations and safety for those trading cryptocurrencies, many have interpreted this as a step too far, particularly for those advocating the decentralized nature of blockchain trading. Similar criticism fell on peer-2-peer platform Localbitcoins, that announced earlier this month identification documents would be necessary if partaking in significant trading activity.
Unsurprisingly, backlash immediately ensued from the cryptocurrency community, with users taking to Twitter to rally Bitfinex account holders to withdraw their funds. One such user includes crypto personality Whale Panda, who wrote: “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.”
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 pic.twitter.com/VkYchg3sqg
— Whalepool (@whalepool) May 17, 2018
Bitcoinist have reported that Bitfinex responded to the criticism by admitted that they were “deliberately targeting” specific users account details, although it is unclear the specifications with which those targeted are being held to.
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