Best Bitcoin Card for Denmark
Denmark takes a close look at crypto investors. After it became known that Danish citizens in Finland participated in tax-relevant transactions with crypto currencies, there are now possible violations of Danish tax law. Three Danish crypto exchanges are now required to disclose user data.
We recently explained the attack vectors for an anonymous use of the peer-to-peer network Bitcoin and how to achieve more privacy in the network. Denmark is now proving that government authorities can sometimes find fault with anonymous payment channels.
A press release from the Danish tax authority Skatte Styrelsen (SKAT) states:
“Three Danish crypto exchanges must now provide the tax authorities with information on all purchases and sales of crypto currencies made by their customers in the period from 1 January 2016 to 31 December 2018”.
It is not known which three exchanges are involved. A process that already has a certain tradition in Scandinavia is thus taking effect. As the press release says, it was probably only the Finnish colleagues who gave Denmark the taste to take a close look at crypto investors. Finland would have leaked information about the activities of Danish crypto-enthusiasts on Finnish Exchanges to Denmark last summer. Since then, the tax authorities have also been targeting Danish-based Bitcoin exchanges.
Exchanges must publish information about users
According to the press release, Danish crypto-exchanges are now required to provide SKAT with information such as names, addresses and the CPR number (a kind of individualised personal identification number). Then, as a preventive measure, the authorities subject all crypto investors to a tax audit:
“As soon as the information is received, the tax authority ensures that citizens who have traded in crypto currency have paid the correct tax.”
The information provided by the Finnish Tax Investigation Office would have suggested that Danish citizens were involved in tax offences. This finding probably led the Styrelsen Skatte to take a close look at the entire industry – not to say put it under general suspicion.
“When we recently received information about Finnish Bitcoin exchanges, we saw a small section of a larger picture. Now we have the opportunity to uncover even more”,
the director of the agency, Karin Bergen.
Stock exchanges and the single point of failure
The message shows that crypto exchanges are perhaps the most relevant single point of failure for breaking the (supposed) anonymity in the Bitcoin network. With the requested information, Danish authorities can uncover all previously pseudonymous transactions and trace the payment paths of Bitcoin users.
- The Kingdom of Denmark is a constitutional monarchy and a sovereign state. Its territory includes Denmark and the Faroe Islands, both of which are in northern Europe, and Greenland, which is part of North America. The Kingdom of Denmark is therefore an intercontinental state.
- The autonomous territories of Greenland and the Faroe Islands fly their own flags, have their own official languages and belong to NATO, but not to the EU.
- The motherland between Scandinavia and Central Europe covers an area of about 43,000 km², of which about one third is made up of the 405 islands.
- Denmark has the only land border with Germany. A relatively strong Danish minority lives in the former Danish South Schleswig. In Denmark, on the other hand, there is a German minority in the former German North Schleswig.
In February 2006, the cartoon controversy brought Denmark, which until then had been rather inconspicuous from a foreign policy point of view, to the centre of world public attention.