Do cryptocurrency exchanges implement CRS/FATCA?

respect

Offshore Agent
Entrepreneur
Hi,

I would like to know if cryptocurrency exchanges such as GDAX, Kraken, Bitfinex or Binance implement CRS or FATCA in any kind of way.

In theory, they should not report anything to foreign tax authorities, but I am asking just to make sure.

Thanks
 

blizz

Trusted Member
Business Angel
Mentor Group
They don't as it is right now. I'm confienced that they will do that before the end of this year in order to get regulated!
 

respect

Offshore Agent
Entrepreneur
They don't as it is right now. I'm confienced that they will do that before the end of this year in order to get regulated!
In case they implement CRS:

- Would that implementation be retroactive? Meaning that they will report things prior implementation of CRS?
- Does CRS disclose total entry and exit of funds over a whole year or just account balance at 31st of Dec?
 

blizz

Trusted Member
Business Angel
Mentor Group
If so they will report current status of your account, I don't believe they go back in time.
 

respect

Offshore Agent
Entrepreneur
If so they will report current status of your account, I don't believe they go back in time.
What about disclosure of information? I am not sure if CRS also reports volume of transactions per year (entry amount and exit amount). Because if not, there are always ways to get the money out near end of the year, and then get the money in again.
 

blizz

Trusted Member
Business Angel
Mentor Group
someone else has suggestion or simple input?
 

mrmrmanhuman

New Member
What about disclosure of information? I am not sure if CRS also reports volume of transactions per year (entry amount and exit amount). Because if not, there are always ways to get the money out near end of the year, and then get the money in again.
Depends on the type of account. But any redemptions in that year will generally be reported (aggregated).
 

7889

Building Trust
Entrepreneur
Well, here is self-explanatory email all Bitfinex users received in May

Dear Customer,

Under the laws of the British Virgin Islands (which are applicable to entities organized in the British Virgin Islands, including us), we are required to report certain account information to the BVI government. The government of the BVI may then exchange that information with the tax authorities of the customer’s country of residence, consistent with British Virgin Islands law, the U.S. Foreign Account Tax Compliance Act (FATCA), and the Organisation for Economic Co-operation and Development Common Reporting Standard (CRS).

You can read more about FATCA here and about CRS here.

Pursuant to BVI law, we are required to obtain self-certifications from our customers in order to ascertain each customer’s tax residence. To that end, we are providing links to the following four self-certification forms:

(1) FATCA self-certification form for individual customers (available here);
(2) FATCA self-certification form for entity customers (available here);
(3) CRS self-certification form for individual customers (available here);
(4) CRS self-certification form for entity customers (available here).

We request that you complete the appropriate self-certification form and upload it to your Bitfinex account (Account > Verification > Manage Documents > Upload New) by May 24, 2018, at the latest. If you are a U.S. person (i.e., a U.S. resident, a U.S. citizen, or an entity organized in the United States), or an entity with at least one 25%+ owner who is a U.S. person, please complete the appropriate FATCA form. Otherwise, please complete the appropriate CRS form.

You are required to provide us with such information. As a reminder, by agreeing to our terms of service (as set out at Bitfinex ), you have agreed to use the website in compliance with applicable laws or regulations.
 

mrmrmanhuman

New Member
Then again, does it mean that the crypto accounts are reportable as Financial Accounts? There are a few tests to clear for you, as an account holder to be reported.

1) open an account with a reporting financial institution
2) the account has to be a financial account
3) you have to be a tax resident of a CRS Reportable Jurisdiction

For #1 to even meet the conditions, bitfinex must be one of the 4 types of financial institution; depository, insurance, investment entity, custodial institution. I wonder which category they are in and if they specifically meet the criteria to be scoped in.
 

John Spectre

Building Trust
Entrepreneur
All crypto exchanges that are in CRS countries and process real fiat(no the only usdt ot tusd) must report, because they hold customers money.
They could try to play around to avoid it, but they should as a law.
 

mrmrmanhuman

New Member
So the fiat is definitely reportable, but would the value of the cryptos be considered and reported too?

And since we are on that point, since USDT is a crypto, would it be considered fiat or not as it tracks the USD?
 

John Spectre

Building Trust
Entrepreneur
It's better to ask each exchange where you trade.
But for sure they don't care about customers tax results and can report crypto assets too without any issues if they decide to do this.

All what they do, its for their own favor for have less problems with regulators.
In example, how crappy bitfinex send randomly mesages about self reporting forms to some users, I believe they could really report someshitty information which could lead to problems with tax auhtoritiex in customers residence countries.
 

7889

Building Trust
Entrepreneur
So the fiat is definitely reportable, but would the value of the cryptos be considered and reported too?

And since we are on that point, since USDT is a crypto, would it be considered fiat or not as it tracks the USD?
1. No
2. No
 

mrmrmanhuman

New Member
1. No
2. No
On your Response to #1, I read that if the cryptos are considered Financial Assets, and the entity which holds the cryptos are considered Custodial Institutions, the crypto holdings will be financial account and its net value will have to be reportable. any thoughts on this?
 

7889

Building Trust
Entrepreneur
On your Response to #1, I read that if the cryptos are considered Financial Assets, and the entity which holds the cryptos are considered Custodial Institutions, the crypto holdings will be financial account and its net value will have to be reportable. any thoughts on this?
That's a question with no clear answer, and we can only speak of current situation. Some countries made it clear that they consider crypto financial asset (Israel, for example), some say it's a property, but we've yet to see how exactly crypto report may look. As of today, CRS/FATCA report shoould include (other than personal informaiton)
  • the gross amount of interest paid on a deposit account
  • the gross amount of dividends paid or credited to the account
  • the gross amount of interest (including interest and dividends) paid into the account
  • the gross amount made from the sale of an asset held in the account
  • the account balance on the reporting date
Now, as i see it, only "the gross amount made from the sale of an asset held in the account" can be applied to crypto exchanges and only if it was crypto-to-fiat exchange. There is no mechanism to report that so and so has "1 btc, 100 eth, 500 ltc as of 31.12".

Thinking of it, i'm wondering what exactly Bitfinex is going to report. They don't support FIAT trading, only USDT, which is meaningless in terms of CRS. Maybe they are going to report trades made via their OTC desk though.
 

John Spectre

Building Trust
Entrepreneur
Bitfinex support fiat trading as well as usdt.
The simpliest way for report for exchanges is a make balance reports snapshot for date 31.12 at market rate for all crypto assets.

Maybe they are simplify report and send only fiat balance that was on 31.12 on the account, but its to simple way for avoid any summ in reporting, so I doubt exchanges will do this way.
 

mrmrmanhuman

New Member
Common Reporting Standard (CRS) | IB Knowledge Base
Just an example what info regular broker are send.
So, its no difference what asset you held: stock, crypto, etc.
All account balance and total summ of sales reportable.
For good measure, I got to clarify with you that the crypto may not be reported if it is not considered a Financial Asset under the CRS definitions, refer to the OECD CRS Commentary, section VIII, para 23 oneards - Common Reporting Standard and related Commentaries - Organisation for Economic Co-operation and Development

If cryptos are not covered in the definitions or do not have the same characteristics as the definition provides, then its balance may not be reportable in the case of a custodial account.
 

mrmrmanhuman

New Member
That's a question with no clear answer, and we can only speak of current situation. Some countries made it clear that they consider crypto financial asset (Israel, for example), some say it's a property, but we've yet to see how exactly crypto report may look. As of today, CRS/FATCA report shoould include (other than personal informaiton)
  • the gross amount of interest paid on a deposit account
  • the gross amount of dividends paid or credited to the account
  • the gross amount of interest (including interest and dividends) paid into the account
  • the gross amount made from the sale of an asset held in the account
  • the account balance on the reporting date
Now, as i see it, only "the gross amount made from the sale of an asset held in the account" can be applied to crypto exchanges and only if it was crypto-to-fiat exchange. There is no mechanism to report that so and so has "1 btc, 100 eth, 500 ltc as of 31.12".
This is a very interesting point. Any idea if there are any trading platforms out there which allows you to trade (i.e. realise) your stock by way to exchanging it for another stock? Probably not due to the difficulty in matching a 1 to 1/whole number swap (else one party will make a transaction loss). But that is such an idea to explore.
 

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