Tax authorities in the UK are seeking bids for software that will track cryptocurrency transactions linked to illicit activities.
One thing that authorities do when dealing with crime is to follow the money. Nothing helps ensure catching criminals and bringing them to justice than following a trail of financial transactions. Cryptocurrency offers a troubling wrinkle to authorities due to its somewhat anonymous nature. Tax authorities in the UK are seeking to remedy this situation by offering developers US$130,000 to create software that will track and trace cryptocurrency transactions, particularly those transactions that are of an illicit nature.
Crypto Anarchy in the UK
The HM Revenue and Customs (HMRC) department have posted a listing seeking applicants for this tracking endeavor. The agency is looking for software that will track and trace Bitcoin, Ethereum, Ethereum Classic, Ripple, Bitcoin Cash, Tether, and Litecoin. Of particular interest to the HMRC are privacy coins, such as Monero, Dash, and Zcash. The goal is to link the cryptocurrency transactions with the individuals making them. The HMRC is undertaking this route in order to combat those evading paying the proper taxes on their cryptocurrency gains as well as individuals using service providers that offer mixing, dark market, and gambling services.
The proposal by the HMRC states:
Crypto assets, such as Bitcoin and Ethereum, provide a means to transfer value between interacting parties. Also known as virtual and crypto currencies, these services are increasingly used for a range of purposes, from international money transfers, sales of digital services, paying staff, and tax evasion and money laundering.
Deadline Looming
The submission deadline for this proposal by the UK tax agency is January 31, 2020. Evaluation of the submissions will take place from January 30 through February 2, with moderation occurring on February 2. The 12-month contract will begin on February 17, 2020. If there is one thing that central governments hate, it is not getting the total amount of taxes they feel it is owed. As cryptocurrency continues to gain mainstream acceptance, it should be expected that governmental tax agencies will want to keep tabs on how much people make or lose on virtual currencies. The IRS in the United States already went down this road when it got account information from Coinbase back in 2018. Last year, the IRS used the information gained to send out letters to thousands of crypto traders, informing them that they may (or do) owe taxes.Images courtesy of Pixabay.