IRS wants more authority to collect data on cryptocurrencies
The Internal Revenue Service asked Congress for more authority to request reports on transactions from cryptocurrency exchanges and brokers on Tuesday, Bloomberg reports. The IRS hopes to use the data it collects to craft regulations for the rapidly growing crypto industry – if it is able to force the biggest players in the space to comply.
The organization made the request during the hearing of the Senate Finance Committee on the IRS proposed budget for fiscal year 2022. IRS Commissioner Charles Rettig said the group is frequently challenged in its demands for reports and “to have a clear diktat from Congress on the authority of [it] collecting this information is essential.
An IRS demand for real power to do something about cryptocurrencies makes sense. Proposed legislation regulating the industry is piling up, especially since Biden took office. In December, the Financial Crimes Enforcement Network (FinCEN) proposed requiring exchanges to report information (like names, for example) connected to private anonymous crypto wallets trading more than $ 10,000 per day. He also proposed similar ‘know your customer’ requirements. on international transactions. The government’s goal seems to be to make exchanges work more like banks and cryptocurrencies themselves more like cash, as Forbes written. Presumably, with the taxes both would involve.
The most recent case for this conceptual and legal reframing was a request from the U.S. Treasury Department on May 20. The Treasury (of which the IRS is technically a part) has officially asked all exchanges to share information on transactions over $ 10,000. The report released by the department at the time claimed that “cryptocurrency already poses a significant detection problem by facilitating illegal activity, including tax evasion.” Collecting data on these transactions could hopefully make this practice less attractive, and the IRS’s request makes it clear that it will need help.
However, with Congress and the IRS choosing to move forward, the demand is another example of the growing effort to bring the wild west wilderness out of the cryptocurrency industry. With the popularity of crypto, there are bound to be more.