The Israeli Tax Authority conducted an audit at the offices of Bits of Gold and reached agreements whereby the company would provide information about customers who transfer over $50,000 a year.
The Tax Authority is taking another step towards locating money laundering through digital currencies. The Authority reached agreements with the Israeli cryptography company Bits of Gold, which serves as a platform for purchasing and trading of Bitcoin and Ethereum. According to the agreements, the company will provide information on each of its customers that made transfers of more than $50,000 over 12 months. At present, the company is obligated to pass on the information about customers that operate on such a scale to the Money Laundering Authority but not to the Tax Authority, in order to protect the privacy of citizens.
This agreement promotes the Tax Authority to locate money laundering using digital currencies since Bits of Gold is one of the largest companies in the field in Israel and has more than 50,000 registered customers. The Tax Authority is expected to approach companies and other platforms operating in this field, in order to reach similar agreements.
Dr. Asher Holzer, Chairman of HeartChain, a blockchain-based platform for medical innovations development funding, said: “Unlike those who criticize the move, those who work in an orderly fashion, wish for the day the Tax Authority and other regulatory bodies will intervene and put the Crypto field in order. The Crypto field receives tremendous interest in Israel, and one of the main obstacles to regulate it, as regularly arises, is the issue of money laundering detection.
The measure taken by the Tax Authority proves that enforcement agencies have ceased to ignore this phenomenon and acknowledged that cryptocurrencies had become a matter of public and economic importance. Transparency and making sure that tax is being paid will help to establish the crypto-currency business as the mainstream modality and an integral part of the payment system. I am hopeful that such measures are meant to promote the Crypto regulation, rather than to burden the activity.”
The Tax Authority does not have a legal ground to require companies like Bits of Gold to provide information about their customers. But these companies have a good reason to cooperate with the Tax Authority and pass on the information. They desire to be perceived as companies with legitimate activity. Indeed, the Tax Authority’s reference to Bits of Gold and future references to other companies does not necessarily mean that these companies’ customers are suspected. The goal is to obtain information that will help find those who are using the platform to avoid tax.