In an effort to prevent the cryptocurrency being used to launder money and avoid taxes, the Treasury will begin making cryptocurrency traders disclose their identity. Online bitcoin exchanges operating in the UK will be legally required to disclose user’s identities and report any suspicious behaviour to the Treasury. If successful, the policy will discourage people from using cryptocurrencies to bypass tax laws. This regulation is expected to come into effect next year.
Why It’s Important
By enforcing cryptocurrency regulation, the Treasury is likely to be successful in cracking down on the illegal uses of cryptocurrencies. However, there may be a backdoor on the horizon for money launderers.
The Russian government announced earlier this year that citizens would be able to exchange rubles for CryptoRubles, a cryptocurrency created by the government. Trades in CrpytoRubble from an unidentified source will be taxed at 13%. Criminals might find ways of laundering money through Russia, making the UK’s policy redundant. The CryptoRuble is expected to be tradable in 2018.
Unlike many cryptocurrencies, the CryptoRuble will not be decentralised and will be issued and tracked by the state, much like the ruble. Critics claim that unofficial markets for the CryptoRubble are inevitable, and those hoping to launder money through Russia could potentially be able to take the tax hit to do so. It is still to be confirmed how the cryptocurrency will be tied to the ruble.
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