Regulators looking to crack down on Unlicensed Crypto Businesses

Unlicensed Crypto Business

Welcome back to the Tribe! In this post we dive into regulators trying to crack down on every unlicensed crypto business.

Nothing should be considered investment or financial advice. Enjoy the ride!

Unlicensed Crypto Business

Officials from the IRS have said that crypto exchanges should expect more legal requests for records and information in the coming months. The move comes as the agency plans to combat concerns regarding tax evasion and establish more inclusive regulatory policies for crypto businesses.

Similarly, Britain’s top financial watchdog has disclosed that the agency currently has 50 open crypto-related investigations after opening over 300 cases in 2021.

IRS to Probe Crypto Firms

According to Politico, the U.S. Internal Revenue service has plans to demand information and personal records from crypto exchanges through court orders. The report reveals that the IRS hopes to use the information in ongoing investigations regarding tax evasion and in a bid to optimize existing regulation regarding virtual assets.

America’s IRS has reportedly made similar efforts over the last few years as crypto adoption and investments have continued to rise in popularity. Officials claim that previous information requests allowed the agency to identify crypto holders with undeclared assets.

Back in 2016, the IRS made its first request of this nature to major cryptocurrency exchange Coinbase. Following cooperation from the platform, the tax agency received access to over 13,000 account holders in a bid to shed light on illicit activity.

As the watchdog moves towards more optimized enforcement of tax laws and efforts geared towards concise declaration of gains from cryptocurrency investments, the national fraud counsel at the IRS Fraud Enforcement Program Carolyn Schneck shed some light on the agency’s tactics.

Schneck said that exchanges and investors alike should expect from the IRS with respect to John Doe summonses in this area. Regarding crypto tax compliance and regulatory infrastructure, Schneck added that:

“The question of whether a taxpayer engages in digital asset transactions is being built into every examination and every collection matter.”

UK’s FCA Investigating Crypto-related Scams and Unlicensed Businesses

In other news, Britain’s Financial Conduct Authority (FCA) has announced that some 50 cases related to scams facilitated through crypto are currently open for investigation. The news comes after the FCA announced intentions to amp up its crackdown on virtual asset service providers (VASPs) in a bid to protect investors and their capital.

The FCA also plans to provide improved regulatory oversight with regards to licensing crypto business and their associated operations within the UK. Officials from Britain’s top watchdog opined that over 172 firms currently operate within its jurisdiction without proper legal documentation.

FCA representatives also disclosed that the thousands of complaints received since April 2021 incentivized the agency to take action. An excerpt from the announcement reads:

“Between April and September last year, the FCA received 16,400 enquiries about possible scams, up nearly a third from the same period in 2020. The top types of scams being reported to the FCA included crypto asset, boiler room and recovery room scams.”

Other News – NFT Buying Volume

Non-Fungible Tokens (NFTs) became popular in the crypto space last year. There were huge sales and the buying volume increased by leaps and bounds ever since. Also, the interest shown by the number of online searches for NFTs increased steadily from then, but in the last month (February 2022), this interest seems to have dropped.