British tax authority plans tracking tool of Bitcoin transactions

Those who want to maneuver their fortune in supposedly anonymous crypto form past Your Majesty’s watchful servants could soon be proven wrong. Because the British tax authorities are upgrading their Bitcoin tracking technology.

Skeptics do not say that cryptocurrencies are an effective tool for money laundering and tax evasion without any foundation. The use of Bitcoin & Co. for such purposes remains a marginal phenomenon. Nevertheless, it cannot be denied that the quasi-anonymous nature of many digital currencies is to some extent in line with unlawful intentions. In order not to lose out in the fight against cybercrime, the British tax authority HMRC is therefore planning to acquire a tool for tracking crypto-transactions. Suitable IT companies can apply for the project until 31 January.

The British news site PublicTechnology reported on the tender with reference to relevant documents. According to this, the royal authority wants to fill “information gaps” on the Bitcoin front with a commercially acquired product. HMRC expects, according to its own statements

providing a tool that supports information collection methods to identify and group crypto-asset transactions into linked transactions and to identify those linked to crypto-asset service providers

Providers of gambling and darknet sites targeted by investigators

As mentioned in the product description above, HMRC wants a tool that orders and groups crypto-transactions using cluster analysis. This should enable the financial flows to individual companies and organisations to be traced.

  • The authority is focusing on providers from the gambling industry who are offering all kind of casino games, Bingo and Slots for example. BTC casinos have gained a lot of customers the last few years. A list of these casinos can be found at for example.
  • They are also looking for operators of darknet sites. The tool is also intended to help track down crypto-criminals and similar cyber-criminals.
  • The tax investigators provide a list of currencies that can definitely be tracked with the tool. These include: Bitcoin and Bitcoin Cash, Ethereum and Ethereum Classic, and Ripple, Tether and Litecoin.

Besides these common crypto currencies, it would also be desirable if the tool could also track the Privacy Coins Monero, Zcash and Dash. The Authority is prepared to spend £100,000 on an annual programme licence. The contract would start on 17 February.

HMRC already put pressure on Bitcoin exchanges in the summer

Meanwhile, the UK tax authorities had already made an attempt in August 2019 to recover lost tax revenue from Bitcoin transactions. At that time, it had written to the crypto exchanges Coinbase, eToro and CEX.IX requesting them to release customer and transaction data.

Similar efforts in the fight against tax evasion have already been observed on the other side of the Atlantic. However, the US tax authority IRS chose a slightly different approach to its British sister organisation. It decided to send thousands of warning letters directly to the owners of Bitcoin and other crypto assets.

Deutsche Bank dares long-term forecast for Bitcoin & Co.

Even though 2019 was marked by clear recovery tendencies in the cryptomarket, Bitcoin & Co. have not yet been able to really make their way into everyday life this year either. Currently BTC is mostly used for trading, betting on sports (read more at or anonymous payments. However, Germany’s largest financial house believes that this will change significantly in the next ten years.

In a study entitled “Imagine 2030”, Jim Reid, an analyst at Deutsche Bank, gave a quite surprising outlook on the development of crypto-currencies like Bitcoin in the coming decade.

Fiat system at the end?

In his report, the expert pointed out that cryptocurrencies have already presented the established Fiat system with major challenges in recent years. In about ten years – until 2030 – digital coins have the potential to provide a changing of the guard at the top and to overtake the current financial system. Bitcoin, Ethereum, Ripple & Co. could replace fiat currencies, says Reid.

In particular, the expert pointed out that the demand for e-materialised means of payment and anonymity will lead more and more people towards crypto-currencies. Reid highlighted inflation and the rise in the price of gold since the 1970s following the end of the gold-backed monetary system.

“Crypto-currencies have so far been an addition rather than a replacement to the global monetary system,” Reid continued in the study. Despite their well-known advantages such as speed, minimal transaction fees, easy storage and relevance in the digital age, digital currencies have not yet managed to establish themselves as a means of payment. “But that could change in the future,” says the Deutsche Bank strategist.

“That the current Fiat system has survived for so long required a random series of global forces over decades that have created significant natural, compensatory, disinflationary forces,” the strategist writes in his report.

Cryptosystem still has challenges to overcome

  1. Before that, however, digital assets would still face hurdles that would have to be overcome. First, they must achieve a legitimate status in the eyes of governments and regulators.
  2. This would bring price stability and also ensure global reach in the payments market.
  3. In fact, volatility is a major reason why many consumers – and potential institutional investors – are sceptical about currencies like Bitcoin.

In order to achieve reach, service providers such as Apple Pay and Google Pay, credit card providers such as Visa and MasterCard, and merchants such as Amazon and WalMart need to be brought on board. But if these hurdles could be overcome, the future of the Fiat system would be in jeopardy, Reid believes. At the same time, however, new challenges will arise when crypto currencies enter the mainstream. In his report, the Deutsche Bank expert mentions, among other things, dependence on electricity, cyber attacks and a digital war as potential threats to a financial system based on crypto-currencies. In this case, the expert warns, “the line between crypto-currencies, financial institutions and the public and private sectors could become blurred.

Crypto does not necessarily mean Bitcoin

In a possible rise of digital currencies, however, Reid does not necessarily see the current largest crypto currency, Bitcoin, at the top. “Looking ahead to the next decade, it wouldn’t be surprising if a new and common crypto currency were to emerge unexpectedly,” he says.