Do you think Bitcoin profits are anonymous? Blockchain is a complete, perpetual record of your crypto history and it is being de-anonymised. Blockchain is forever. Below I keep track of the relevant developments.

As I have argued in my previous article on Bitcoin, anonymity of cryptocurrencies is a double-edged sword. It allowed private investors to evade taxation and scrutiny by the authorities, for a while, but it also concealed the main players, their motives and the purpose of the blockchain project itself. In a recent article, Justin Danneman collates evidence that the US Federal Reserve, The Depository Trust Company (a member of the U.S. Federal Reserve System) and AXA Strategic Ventures already control major cryptocurrency exchanges (Coindesk, Coinbase, Kraken) , payment systems (Ripple, Bitpay) as well as Bitcoin and Bitcoin Cash. Judging by the recent federal court ruling in IRS v Coinbase, de-anonymisation of Bitcoin is going to proceed rapidly now, and many cryptocurrency investors will be caught with their pants down if they have not paid taxes on the associated profits. The entire history of transactions is recorded in the Blockchain, retrospectively, forever. Once the crypto tax avoidance purge is competed, a radical shift to cashless economy based on a de-anonymised blockchain model is more than likely (ZeroHedge).

Update 29.12.2017: The latest developments in Korea (The Telegraph) and India (Quartz – India) seem to confirm the global push to explicitly de-anonymise cryptocurrencies. Sputnik reports that Russia’s Finance Ministry is working to implement taxation of cryptocurrency mining as an entrepreneurial activity and is also preparing a draft legislation on taxation, control and accounting of all virtual currencies.

Update 30.12.2017: The Age reports that major Australian banks are beginning to enforce a range of clauses in their terms & conditions which allow the bank to freeze accounts and block transfers to Bitcoin exchanges. Commonwealth Bank’s current terms & conditions stipulate the right to refuse to process an international money transfer if “the destination account (…) is an account used to facilitate payments to Bitcoins or similar virtual currency payment services”. A Westpac representative said that the bank may act to ensure compliance with Australia’s anti money laundering obligations. The ANZ Bank terms & conditions stipulate that the bank “may exercise its discretion to close an account due to unsatisfactory conduct or for any other reason it considers appropriate”. It seems the Australian banks are quietly demonstrating that cryptocurrencies will not be allowed to function without regulatory oversight.

Update 23.01.2018: Innovation Australia reports that the Australian Tax Office “is investigating measures to ensure that cryptocurrency investors and traders are paying the right amount of tax on their investments. (…) Anyone transacting Bitcoin or other digital currencies is advised to keep the dates of the transactions, the amount of Australian dollars transacted, what the transaction was for and who the other party was. (…) “Cryptocurrency platforms [are already] subject to the same reporting and regulatory obligations as the major banks.” As a result of these developments, Cryptocurrency transactions originating in Australia ought to be regarded as fully deanonymised.

Update 05.02.2018: The Telegraph reports that “credit card customers of Lloyds, which includes Halifax, Bank of Scotland and MBNA, will be blocked from buying the cryptocurrency online via a blacklist which will flag up sellers. While Lloyds is the first, it is thought that other banks will shortly follow suit. (…) Lloyds’s decision follows several of the biggest US banks banning credit card payments last week as part of a broad crackdown on Bitcoin that saw its price tumble to a three month low. JP Morgan, Bank of America and Citigroup said they would block attempts to buy digital currencies. (…) The [UK] Treasury is planning to regulate Bitcoin and bring in new rules which force traders in cryptocurrencies to disclose their identities and report suspicious activity.”

And if you think you can outsmart the IRS and similar agencies by Bitcoin Mixing, you should read THIS.

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