The UK tax authorities, Her Majesty Revenue and Customs (HMRC), are allegedly putting pressure on cryptocurrency exchanges to release customers’ personal data and transaction histories. Several internal sources have reported this to cryptocurrency news site CoinDesk.
With this HMRC wants to tackle tax evaders in the cryptocurrency sector. At least three letters have been sent to cryptocurrency exchanges in the UK that have been received by Coinbase, eToro, and CEX.IO. None of the companies responded at the time of writing.
One of the internal sources would have told CoinDesk that HMRC wants to work with exchanges to retrieve personal information from people who trade in cryptocurrency. He or she expects HMRC to look no further than two to three years in time. It would be very difficult to find information from 10 years ago:
If they [HMRC] only go back two or three years, I think the interesting thing here is that the individuals who entered crypto very early will not be affected in 2012-2013. Those who have probably made the biggest profit will not be affected, it will be the people who stepped in around the time crypto peaked.
Thus the anonymous source. CoinDesk indicates that the HMRC has submitted a request for more information, but that HMRC wants to withhold further details because its disclosure could jeopardize the collection of any outstanding tax. HMRC does say that they have the authority:
These exchanges can store information about their customers and the transactions they have completed. These transactions can lead to possible taxation and HMRC has the authority to require exchanges to provide this information.
With this, HMRC appears to be following in the footsteps of the Internal Revenue Service (IRS), or the US tax authorities. The IRS had sent a warning letter at the end of last month to more than 10,000 US cryptocurrency holders.
The British financial regulator, Financial Conduct Authority (FCA), published a document last week stating that they will not regulate cryptocurrencies such as bitcoin (BTC) and ethereum (ETH).