United Kingdom plans to track transactions made with Bitcoin, Ethereum, XRP

  • HM Revenue and Customs, a non-ministerial department of the UK Government responsible for the collection of taxes is looking to purchase a tool that can track transactions using Bitcoin, Ethereum, XRP and other Altcoins.
  • The measure is similar to that taken by the U.S. Securities and Exchange Commission (SEC).

A notice published by the British tax regulator, HM Revenue and Customs, revealed that the institution seeks to track and remove the anonymity of all transactions made with Bitcoin, Ethereum, XRP. In the notice, the UK regulator reports that it will pay $110,000 in a one-year contract to anyone who can provide a tool that will allow them to:

identify and cluster cryptoasset transactions into linked transactions and identify those linked to crypto asset service providers.

The UK regulator also defines the functions and capabilities that such a tool needs to have. First, it must be able to identify transactions using cluster analysis and also determine the degree of trust of the clusters.

In addition, the tool must be able to assign an address or address group to a business entity, a crypto exchange or a provider of these services. As part of the requirements, the regulatory authority also requires that it must be possible to monitor the activities of betting services, the black market and other mixed services.

The regulator also requires the provider of the tool to be able to trace any forks of the aforementioned assets, in addition to tracking transactions. For potential future developments of the tool, the regulator is also interested in tracking the transactions of Ethereum Classic, Litecoin, Bitcoin Cash and Tether. In the long run, it also wants to track privacy coins like Monero, Dash and Zcash as a priority for further development.

The British institution justifies its request with the fact that cryptocurrencies are used for illegal activities. The supervisory authority sees this as a growing trend and is therefore looking for a way to counteract it.

Following the SEC’s footsteps

Last year the United States Securities and Exchange Commission (SEC) made a similar notice. There it asked vendors and blockchain technology experts for tools that would allow it to track and convert data for analysis. From this data, the SEC planned to determine the identity of an individual or entity behind an address.

Regulatory institutions worldwide have been stepping up their efforts to reduce the level of anonymity that exists within the ecosystem. For example, also in the United States, the Internal Revenue Service (IRS), has begun asking its citizens about their activities related to cryptocurrencies. In the community the measure was taken as an invasion of privacy and even as a disproportionate measure.

The crypto market has also suffered from the consequences of the tightened regulations. Privacy coins, such as Monero and Dash, have been removed from the major exchanges. In the future, however, they could increase in value if users perceive them as the only means of counteracting the measures of the regulatory authorities and protecting their privacy.

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About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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