Big time cryptocurrency traders in Japan could be getting a letter from the tax man next year.
The Japanese government is developing a system to catch those who are not paying the appropriate taxes on the profits made from cryptocurrency trading, according to local news.
According to sources close to the matter, the system would allow the Japanese National Tax Agency (NTA) to request the cryptocurrency transaction information of individuals thought to be evading the tax.
In Japan, any profits obtained from trading cryptocurrencies fall under the Income Tax Act, so individuals must pay tax on these profits if their earnings are above 200,000 yen ($1,700) per year.
The source states that Japanese cryptocurrency businesses only have to submit information about their customers on a voluntary basis. With the new framework in place, businesses would be legally obliged to hand over information about their customers.
This information would include names, addresses, and personal identification numbers. While it might sound like the beginning of the end for any form of anonymity in cryptocurrency, not everyone is going to be affected.
The NTA is starting by setting its sights on those it thinks have earned over 10 million yen ($88,000) from cryptocurrency trading. Small time hodlers appear to be safe – for now at least.
According to the report, the new system will be rolled out in the next fiscal year in Japan, which runs from 1 April to 31 March.
Japanese authorities have been doubling down on cryptocurrency regulation of late.
Earlier this year, the country’s Financial Services Authority (FSA) announced the industry would have self-regulatory status, allowing the Japan Virtual Currency Exchange Association to police exchanges for violations.