Cryptocurrency industry becomes less decentralized and
anonymous and more regulated and controlled. Government authorities require
crypto exchanges to disclose transaction data of their customers. And the
exchanges seem to be quite collaborative in these terms.
The UK tax watchdog, Her Majesty’s Revenue & Customs
(HMRC), demanded Coinbase cryptocurrency exchange to disclose the information
of their customers’ transactions with the aim of detecting tax evaders. After
negotiations, Coinbase agreed to disclose information of the UK customers with
the volume of cryptocurrency inflow exceeding £5,000.
To notify their customers about disclosure, Coinbase sent an
email notice on October, 2, to make sure the disclosure would not come as a
surprise.
Becoming similar to banks
Such a practice is actually common for most financial
service providers. However, cryptocurrency exchanges attracted their customers
by the fact that they were more anonymous and envisaged less bureaucracy.
The fact that one of the biggest global crypto exchanges
discloses its customer’s data to the authorities might mean that crypto
industry becomes more resemblant to traditional finance. According to
Bitcoin(.)com news outlet, similar requests for information disclosure were
also sent to Etoro and Cex(.)io digital currency platforms.
This has raised concerns among the community members.
Despite most users claiming they pay their taxes properly, the fact that their
information might be disclosed, raises cautiousness. For instance, a Twitter
user @IMineBlocks_com commented on his page:
“Fortunately I've paid my taxes due on Crypto. But I'm very
concerned with not knowing exactly what data of mine is being shared. Name,
Address, Amounts but what about my sending & receiving crypto addresses?”
Pressing on the industry
In fact, the cryptocurrency industry has been facing
regulatory pressure ever since its inception. Governments and traditional
finance giants are cautious about its disruptive potential. What is more, they
might be afraid that decentralization can take away much of their power.
The fear seems so strong that they might even want to hack
cryptos to make them more controllable. As CoinIdol, a world blockchain news
outlet, reported that the United States Internal Revenue Service (IRS) was going
to hire a contractor to crack the code of Monero cryptocurrency. As it has
enhanced anonymity features, Monero transactions are difficult to track, making
it a safe haven for tax evaders as well as other illegal players.
On one hand, the industry does need reasonable regulations,
because its decentralized and anonymous nature attracts criminals as well as
other people aiming to use crypto for illegal purposes. However, too strong
regulations might turn it to something very similar to traditional finance with
complicated compliance procedures and lots of bureaucracy. In its turn, this
might scare off users that were attracted by the industry’s advantages.
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