Imagine winning the lottery but not being able to spend the winnings. After being denied access to their own money, the reality is that Britain’s Bitcoin millionaires have made huge profits from cryptocurrencies.
Banks have turned down digital currency traders who are enjoying huge profits. Financial institutions fear they might be taking money from law-breakers who use digital currencies illegally to hide their wealth.
Cryptocurrencies enable money to move around without the involvement of banks or other intermediaries. The transactions are recorded on a blockchain database, which allows them to be virtually anonymous. These unique reference numbers are used to link them to bank accounts, names, and addresses.
Banks have created a series of obstacles for investors in order to prevent criminal gangs from using digital currencies to trade drugs and arms unrecognized.
Young enthusiasts have been able to make huge fortunes speculating on the price of coins like Bitcoin, Ethereum, and Solana.
36-year-old Vincent Fraysse originally from France, now resides in London. He managed to convert EUR3,000, (£2,500), into $4m (£3.9m), betting on market movements. Although he now works as a crypto hedge fund manager, he said that it took him two decades to convert his crypto profits into sterling so that he could spend them.
He said that he had finally found a bank that would accept me as a client after seven months of vetting. When I finally got some money out to a bank account that would allow me to use it, the bank stopped the account from carrying out further checks.
Clive Gawthorpe, an accountant UHY Hacker Young, said that traders have to wait up to 24 months before they can access their money. Banks are becoming more concerned about tax. He said that every time they trade-in or out of a coin, they trigger a taxable event. Some of these events can be traced back years. This is despite the fact that there are thousands of transactions with no record keeping. “I have one client that has made £25m, and he’s only 19 years old.”
Chris Etherington, a tax firm RSM UK, stated that the problem of proving tax paid is complicated by the fact some traders use “robot trading” software which allows them to make automated trades based upon market fluctuations. He said that there are often millions of transactions to look through, making it nearly impossible to determine the tax position. “I have a client that has done around 2 million trades per year.
Nimesh Shah, an accountant at Blick Rothenberg, stated that he is receiving increasing numbers of referral calls from banks looking to take on new rich clients but first asking for help “cleaning up” their tax records.
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