Denmark Joins in Crypto Regulation to Keep Tabs on the Currency

News / 09.06.2021

After discovering that about two-thirds of the local transactions in Denmark are crypto-related, the country is cracking down on crypto.

Revamping the Old Law

According to the Danish tax ministry, the country’s present tax system, which is nearly a century old, isn’t built to deal with the issues brought by crypto assets. It noted a greater danger of fraud as well as a high rate of filing errors.

Denmark will first define the specific issues that cryptocurrencies represent to tax authorities before deciding what changes should be made to the law. According to the ministry, the present code dates back to 1922 and hence does not consider financial cryptocurrencies.

According to Morten Bodskov, the country’s tax minister, the purpose is to be vigilant and guarantee that their rules are up to date, limiting errors and fraud.

Approximately 16,000 persons and businesses in Denmark traded cryptocurrency between 2015 and 2019. Unfortunately, 67% of such transactions were not accompanied by an accurate tax file. In February, the Danish Tax Agency announced that it had recovered $4.9 million from crypto investors and had reported 48 persons to its crimes unit on suspicion of violating the country’s tax legislation.

Crypto Regulation Measures in Other Countries

Following the major rally over the last year, cryptocurrency has attracted several investors and, similarly, governments who want to regulate the currency to protect its citizens.

The Treasury Department in the U.S. announced its plans to crack down on crypto markets and transactions. It stated that it required any transfer above $10,000 to be reported back to the Internal Revenue Service yearly.

Its release stated that cryptocurrency presents itself as a major problem about its use in illegal activities and prompts tax evasion.

The Biden administration also launched efforts to crack down on tax evasion and to bring about improved compliance. His announcement also included a mention of severe punishment for the offenders. However, a growing number of Wall Street analysts have also sounded alarms that more regulation should be expected. 

Chinese authorities have also made an announcement that calls for increased regulation. They aimed to crack down on mining and trading behavior and prevent the transfer of individual risks to the social setup. They also want to keep a smooth operation of the foreign exchange market, debt, stock, and illegal financial activities. Notably, the country also banned crypto-related services from financial institutions. 

Jerome Powell, Federal Reserve Chair, has also warned that cryptocurrencies present a huge risk to users and the bigger financial system. But, even as the Fed is looking into CBDCs, cryptos still have not gotten to a point where they can be used as a means of payment. It is mostly due to its high volatility.

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Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies.