7:30 a.m. Eastern Standard time. The headline of the BBC article says “Deadline for Swiss banks to sign up to disclosure deal”. What it is referring to is the US trying to get the names of Americans with accounts in tax havens. Today, the Swiss banks are staring at the strong arm of American and other tax authorities’ justice. Or are they?
Time will tell if the deficit running countries’ flanking movement around the Swiss and other tax haven areas such as Singapore or Luxembourgh will garner any badly needed cash or not. The clamp down on the Swiss banks et al started a number of years ago, however, it was in an era before Bitcoin. Will the banks comply? Will they just put window dressing on the problem? Or will capital flee the banks?
All of those questions are coming close to a final answer just as Bitcoin enters a major growth period. The tax officials could not have seen this coming. Their flanking movement will probably collapse as billions of dollars look for another safe nesting ground. The stealth capabilities of Bitcoin are quite formidable. Mostly, there is no central choke point (like the banks) that the governments can bully into compliance. Bitcoin is a decentralized network. If they take down a node the network doesn’t even notice.
According to this article at The Daily Dot,
the US loses $40 and $70 billion in tax revenues annually due to unreported earnings stashed in tax haven bank accounts. Globally, the Tax Justice Network estimates that figure soars up to somewhere in the neighborhood of $225 billion per year.
That represents the taxes owed, not the total amount in the accounts. Assuming a 50% tax, the total in those accounts should be around $450 billion. With the current “market cap” of Bitcoin only around 12 billion, if only 3% of the tax haven money flows into Bitcoin it should double the market cap of Bitcoin and its price.
Can the Bitcoin system handle such a huge influx?
It could be an interesting time!