Government oversight notches a win as Denmark’s tax authority gains permission to collect the private user information of cryptocurrency traders. The decision was made at the last meeting of the Tax Council in December 2018
The ruling means that Denmark’s tax authority will gain access to sensitive information from three unnamed crypto exchanges. The data, which was collected between January 1, 2016 and December 31, 2018, includes names, addresses associated with wallet information, and trading history.
Until now, it’s been easy for Danish crypto investors to hide information from tax authorities, as there has been no prior precedent as to whether exchanges need to supply information on their users. However, this latest ruling means the exchanges will now need provide sensitive information on its users.
According to the Denmark’s tax authority, the ruling will “ensure that citizens who have traded cryptocurrencies have paid the right tax.”
Though the decision to allow governmental access to cryptocurrency exchange data is uncommon, it may help alleviate the public perception that cryptocurrencies are a tool of criminals.
Taxation of cryptocurrencies, such as Bitcoin (BTC), is not a new idea. Several countries, such the US and Japan, are attempting to tax cryptocurrencies. However, in many places, the legislation is either confusing and inadequate, resulting in a call by lawmakers for precedent to be set by tax authorities. Legislators in the US, for example, have asked the IRS for clarity regarding how transactions in cryptocurrency should be taxed.
Though, it currently remains easy for cryptocurrency traders to keep their information private and avoid any taxation, Denmark’s new ruling is seen as a vital step in the race to legitimize cryptocurrencies as legitimate currencies. And though it may take a while for legislation around the globe to catch up with new technology, Denmark’s new ruling may be the precedent that lawmakers have been calling for.