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 LuckyCoiner.com 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.