How Crypto could bring tax evasion to the masses

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Loopholes in lending laws are allowing cryptocurrency users to escape taxes — and the government can’t keep up

WWealthy families and merchants first conjured up the idea of offshore banking in 19th century Europe, seeking a place to store funds away from tax-hungry governments in the aftermath of the Napoleonic wars. Since then, it’s been a race to the bottom. Over the course of the last two centuries, deregulation and lenient financial laws have allowed the rich to tread the fine line between legal tax avoidance and illegal tax evasion.

But blockchain, which first emerged as a concept in 2008, is now offering ordinary people the same possibilities. Using cryptocurrency, anyone with a little technical know-how can open what is effectively the equivalent of an offshore bank account — albeit offshore in cyberspace.

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Foreign banks turn away U.S. millionaires

UBS

UBS, the world’s biggest non-U.S. private bank, said in 2008 it would discontinue offshore accounts for U.S. citizens.

Some of the world’s largest wealth-management firms are wanting American millionaires to go away ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC, Deutsche Bank, Bank of Singapore and DBS Group all say they have turned away business.

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