The possibility of new regulations is being explored by HM Revenue and Customs (HMRC), which would give them the authority to confiscate bitcoin from companies that do not fulfill their tax obligations.
The government is actively considering suggestions that would grant the tax authority the ability to access online wallets, as part of efforts to modernize tax collection methods in the digital era.
Currently, HMRC possesses the authority to seize funds from bank accounts in cases of tax nonpayment through their “direct recovery of debts” powers. However, they are contemplating an expansion of these powers to encompass online payment accounts like PayPal.
Whether this plan includes businesses’ online Bitcoin wallets is a question that could be considered.
The potential action of seizing bitcoin from custodial wallets could be viewed as the most recent effort to crack down on the Bitcoin sector, which has faced allegations such as “facilitating money laundering” and “illicit activities” from governments.
Bitcoin has been promoted as means to provide individuals with financial autonomy outside the purview of government regulation and control, a concept that governments do not like.
While non-custodial Bitcoin wallets remain accessible only to their owners, centralized online exchanges such as Coinbase, Binance, and Kraken could potentially fall into the bounds of these regulations.
Currently, law enforcement agencies have the ability to seize funds from these wallets if criminal activity is detected.
The government has announced its intention to move forward and grant HMRC the authority to seize funds from digital wallets. However, it remains uncertain whether this will include custodial Bitcoin wallets as well.