Coinbase is handing over information on 13,000 users to the IRS
The murky world of cryptocurrency taxationBy Shawn Knight 18 comments
The Internal Revenue Service (IRS) in December 2016 issued a summons demanding Coinbase produce information related to roughly 500,000 user accounts (all of them). Coinbase fought the matter in court and while it was somewhat successful, the exchange is still being forced to hand over data on thousands of accounts.
As a result, Coinbase has notified a group of roughly 13,000 customers that their data is being handed over to the IRS. Specifically, the order requests the taxpayer ID, name, birth date, address and historical transaction records of users that completed transactions of more than $20,000 in a single year between 2013 and 2015.
Coinbase contacted affected parties last Friday regarding the matter and said it has been given 21 days to produce the information. Those with concerns are urged to seek legal advice from an attorney.
While the order only impacts the platform's most active users, it has giving some a reason for concern.
Peter Van Valkenburgh, director of research at Coin Center, told The Verge late last year that they remain deeply unsatisfied with the lack of justification provided by the IRS. Without better rationale for why these specific transactions were suspect, Valkenburgh says a similarly sweeping request could be made for customer data from any financial institution. "It sets a bad precedent for financial privacy," he concluded.
Cryptocurrencies like Bitcoin and their underlying blockchain technology have been lauded for their privacy and deregulated nature. This wasn't much of an issue early on as cryptocurrencies held very little value but once adoption took off and coin values soared, they quickly attracted the attention of governments around the globe.