![]() ![]() It’s impossible to say for certain how many crypto exchanges are reporting to the IRS or precisely which crypto exchanges are reporting to the IRS. Which crypto exchanges report to the IRS? The aim of the game? To root out tax evasion from crypto investors. It’s a partnership between the civil office of fraud enforcement and the IRS and made up of a specialized team trained in cryptocurrency and virtual currency tracking. The success of these summons, alongside the various regulations they must follow in order to operate in the US lawfully, has compelled many crypto exchanges to comply with the IRS to avoid a similar summons in the future.Īs well as this, Operation Hidden Treasure was launched in March 2021. Since 2016, the IRS has issued similar summons against both Kraken and Poloniex. In 2023, the IRS once again filed a court document seeking permission to enforce a summons for information against Kraken. A John Doe summons compels a given exchange to share user data with the IRS so it can be used to identify and audit taxpayers, as well as prosecute those evading taxes. A variety of large crypto exchanges have alread y confirmed they report to the IRS.īack in 2016, the IRS won a John Doe summons against Coinbase. This means they can effectively identify your custodial wallets - like if you’re withdrawing funds to a MetaMask wallet for example. Asking users for short videos of themselves.Īs well as this, crypto exchanges collect other information about you - including your banking information, your phone number(s) and employment details.Ĭrypto exchanges also have the visibility of crypto addresses you withdraw funds to.But KYC checks have evolved alongside ID technology, with many crypto exchanges now adopting various KYC verification methods such as: KYC checks were previously quite simple and only asked for basic personal data like your name, address and sometimes your social security number (though that’s still plenty for the IRS to identify you with). and crypto was singled out as a key focus for these agents.Īll major crypto exchanges now need to complete Know-Your-Customer (KYC) checks on new and existing customers in order to operate in the US. More than 87,000 agents are being hired to enforce tax compliance. In fact, as of 2022, the IRS was granted a huge budget increase in order to tackle tax evasion. The IRS is gaining increasing amounts of data about crypto transactions. Linking your wallet address to you is becoming increasingly easy for the IRS and other agencies, in part, due to the pressure crypto exchanges have faced from government to collect and share customer data. Of course, there is still a sense of anonymity, after all - your wallet address doesn't include any of your personal details. Interested parties can include any government agencies, including the IRS, FBI and more. ![]() So, any interested party can use a transaction ID and a blockchain explorer to find corresponding wallet addresses - or vice versa to see what transactions a given wallet has made. Moreover, all transactions are permanently stored on the ledger. Anyone can access these ledgers and view any transaction on that blockchain. One of the key tenets of blockchain technology is transparency - which is upheld by the public digital ledger. But it's not quite that simple in reality.īitcoin and other cryptocurrencies are built using blockchain technology. After all, cryptocurrencies are often touted as decentralized, anonymous, untraceable and tamper-proof assets.
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