Regulators, governments, and tax men have been confused about how to keep up with the growing cryptocurrency market. He has seen a large gray area appear on the market in which incidents are usually treated as they come.
To this end, the South African Revenue Service, the country’s tax agency, is seeking help from high-tech companies around the world to try to track Bitcoin transactions.
This attempt by the South African Revenue Service (SARS) could potentially open a Pandora’s box since the right to privacy is deeply rooted in the transparent, but anonymous, transactions of Bitcoins.
How does it work now
It has been reported that only 802 people paid taxes on their Bitcoin earnings in the United States in September since the IRS had little choice but to ask people to be honest in their tax returns.
This extends to most countries in the state because there is still no precedent for forcing people to reveal their transactions.
Banks are required to provide SARS and other tax institutions in other countries with information about their clients’ investments for audit purposes, but in a crypto environment this information is lacking.
This leaves the revenue service in a difficult situation that keeps getting tighter as more and more people enter the cryptomarket.
Dr. Randall Carolissen, Director of the SARS Research Group, admits he is studying Bitcoin transaction tracking options.
“As you can imagine, it’s very difficult – Blockchain technology – without revealing too much – we’re talking to some of the biggest tech companies in the world doing similar work for Canada and the UK and we’re hoping get this technology. ”
The problem is that there is a right to privacy that is written in Bitcoin, and it will be difficult for any institution to enter it – legally. Bitcoin transactions are transparent, but anonymous, but this anonymity is not complete.
As there is no precedent for how to monitor transactions on this decentralized system, the tax services and other regulators will have to find a solution themselves.
The problem is that because it is decentralized, no one can come to their aid on the Bitcoin side. Transactions are openly maintained on the Blockchain, but when it comes to linking these transactions to one person and enforcing taxation, this is still a very dark area for regulators.