By David Drake


For the first time, representatives of the Joint Chiefs of Global Tax Enforcement, dubbed as J5, met in Montreal, Canada last month. The JF comprises of Australian Taxation Office (ATO), the Fiscal Information and Investigation Service (FIOD) of The Netherlands, the Canada Revenue Agency (CRA), Her Majesty’s Revenue and Customs (HMRC) of the United Kingdom and the Internal Revenue Service Criminal Investigation (IRS-CI) of the United States. They met to map out a plan on how to investigate international tax crimes and money laundering. They also wanted to contain the growing threat to tax administrations by cryptocurrencies.

We asked two blockchain platform CEOs about their opinions regarding this recent development, Edward W. Mandel, CEO of BQT and Alex Karasulu, co-CEO and founder of OptDyn.

BQT is a P2P exchange platform with innovative hedge trading features while OptDyn is the maker of Subutai, the first global intelligent, blockchain-driven Peer-to-Peer Cloud Computing platform that offers cloud computing, IoT and cryptocurrency mining to all.

More Crackdowns

An increase in the number of crackdowns is to be expected in each of the J5 countries. With the collaborative efforts, governments will be sharing information and hopefully, making it easier for each one to catch the individual or organization doing criminal acts.

Karasulu opines that the “crackdown on existing transnational criminal schemes involving  cryptocurrencies will no doubt increase, leading to negative optics for the industry.”

He further notes that, “There’s probably a build up, a backlog, of valid criminal schemes waiting to be identified and prosecuted. Eventually, the news of transnational tax crimes using cryptocurrency will settle down to a lighter pace to fortify legitimate international transactions.”

In the same vein, Mandel said, “In my view, if J5 goes that route we will see a more stable market, more innovations and growing trend of cryptocurrency transactions and increase in the revenues for the governments and therefore increased support for blockchain and cryptocurrencies.”

The route here refers to joint efforts in solving the cybercrime problem, which threatens the success and legitimization of the cryptocurrency industry.

“If J5 only decides to go with the enforcement route, without the creation of guidance and distinct procedures,  it would only continue to generate turbulence and chaos,” Mandel adds.

He also suggests that crypto and blockchain experts in the field be tapped by J5 to elucidate first hand what is happening in the industry, and also in formulating guidelines/protocols to govern the fledgling industry.

He says, “I am optimistic that smart folks at the agencies would be inviting blockchain experts and using their significant financial resources to develop a good system and rip the long-lasting benefits of the crypto world in the 21st century.”

If this happens, Karasulu says, “In the long run, the J5 will have a positive impact on the industry in general given a few years after the initial fallout. The activities of the J5 may even help save international trade currencies like Ripple for example.”

Cross Border Collaboration

The IRS expertise in scouring for American accounts in foreign banks, especially in Switzerland,  will be an advantage for the J5 collaboration. It is skillful in information gathering and has actively negotiated with foreign banks to open their books and turn over U.S. account holders. Thus, the American taxpayers concerned get pushed to the wall and do the right thing.

Collaborative effort among governments is the key to tracking down cyber-criminals, individuals or organizations, especially in the cryptocurrency landscape. With blockchain technology that records each and every transaction in a ledger, hidden crypto stolen accounts,  once unearthed can be prosecuted. The mainstreamed crypto activities then will flourish, and investors, rich or not, will have the same opportunities.

Dan Fort, head of IRS-CI, issued a statement also along this line saying that ‘organized criminals and tax cheats’ should not be able ‘to manipulate the system and exploit vulnerabilities for their personal gain.’  In 2017 alone, tax liabilities of cryptocurrency related transactions in the United States was estimated at $25 billion.

He told Forbes that the aim of J5 is to strengthen best practices among individuals and become a forward thinking operational group that can pile pressure on the criminal community globally in ways that individual countries could not achieve.




Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.