Cryptocurrency and the Foreign Account Tax Compliance Act An empirical study on cryptocurrency as a method for tax evasion

Liltved, Adrian; Vattøy, Magnus
Master thesis
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URI
https://hdl.handle.net/11250/3014312
Date
2022
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Abstract
The Foreign Account Compliance Act (FATCA) was passed into law in 2010, the objective was

to reduce offshore tax evasion. We examine one avenue left open for U.S. based taxpayers, namely

cryptocurrencies. We study the short-term effect of FATCA on bitcoin trading volume, making

use of available trading data between different fiat currencies to bitcoin. We document a

statistically significant increase in bitcoin trading volume with British pound after the

endorsement of FATCA. We argue that this is indirect evidence showing U.S. based taxpayers

avoiding the information exchange under FATCA.