Bitfinex is a popular cryptocurrency exchange that is registered in the British Virgin Islands – an area that is known as a tax haven thanks to the fact that business registered there want to keep as much of their profits as possible. The exchange has now sent an email informing their customers that they would soon be requiring their tax information, in order to comply to a new law in the British Islands.
The email stated;
“Under the laws of the British Virgin Islands…we are required to report certain account information to the BVI government…Persuant to BVI law, we are required to obtain self-certifications from our customers in order to ascertain each customer’s tax residence…We request that you complete the appropriate self-certification form and upload it to your Bitfinex account by May 24, 2018 at the latest…You are required to provide us with such information.”
The law that they are referring to is the US Foreign Account Tax Compliance Act (FATCA) and the Organisation for Economic Co-operation and Development Common Reporting Standard (CRS).
So what can you do if you have an account with Bitfinex. Well of course you can choose to leave the exchange and move your funds to another exchange; you can comply with the new requirement, and declare all of your cryptocurrency and continue to trade; or you can wait for Bitfinex to move to a new jurisdiction.
The exchange has announced their plans to relocate the business to Zug in Switzerland, which perhaps makes the final option more appealing. By moving to another tax haven area, it could make this new regulation disappear in an instant, as the country really values the anonymity of banking. This is why many wealthy foreigners often choose to open their bank accounts in Switzerland.
Time will tell whether Bitfinex make this move, but this new regulation is unlikely to go anywhere anytime soon.