The US government has gone to great lengths to try and track the origins of cryptocurrency transactions. A new report by research firm Diar indicates that the government, through a number of agencies, has spent a total of $5.7 million on contractors to conduct blockchain analysis, including trying to link individuals with crypto wallets.
One of the advantages of cryptocurrency over fiat is that it allows a certain level of anonymity. However, there are a number of tools available – as well as specific digital currencies – that offer tracking capabilities. If a knowledgeable person knows how to use the tools correctly, it is easy to determine a wallet’s origin in many cases.
If a user ever reveals his or her crypto address to another person or an entity, the puzzle pieces begin to be put into place to trace the transactions back to an individual. A reveal can potentially happen when someone deposits or withdraws funds from a crypto exchange where customer verification details re required. Interacting with another crypto user whose address has been revealed could also lead to identification.
The bulk of the money, 38% or $2.2 million, was spent by the Internal Revenue Service (IRS). The IRS has established relationships nine times with crypto forensics providers in order to try and ascertain some individuals’’ identities.
Following the IRS is a potentially surprising entity. It isn’t the Federal Bureau of Investigation (FB) or the Drug Enforcement Agency but, rather, the Immigration and Customs Enforcement agency, like the IRS, established nine contracts and spent $1.5 million. The FBI, however, had the most contracts – 12 in total – but only spent $1.1 million. The Securities and Exchange Commission (SEC) only spent $185,000 on cryptocurrency forensics.
One company in particular has been the go-to firm for the government. Chainalysis picked up 93% of the total amount, or $5.3 million of the $5.7 million that was spent.
The increase in government spending has brought a whirlwind of money to the blockchain forensics companies, which has also made the firms more attractive to investors. Startups in the industry have taken in $29 million through investments, of which Chainanalysis was the big winner with $17 million.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Five legislators in the United States have sent an open letter to the Internal Revenue Service (IRS), urging the tax agency to update its cryptocurrency tax guidelines.
The letter, sent last Wednesday, was the second of its kind from the House of Representatives’ Committee on Ways and Means. The first letter, sent on May 17, 2017, asked the IRS for its comprehensive strategy on digital currencies.
Now, representatives including David Schweikert, Darin LaHood, Kevin Brady, Lynn Jenking, and Brad Wenstrup are asking IRS Acting Commissioner David Kautter “to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using virtual currencies.”
In their latest letter, the bureaucrats stated that ever since the introduction of cryptocurrencies in the market, the IRS has struggled with how best to treat cryptocurrencies for tax purposes.
They believe the IRS has made “enforcement a priority,” making “robust enforcement actions on a number of fronts, instead of making the public understand everything they need to know about cryptocurrency taxation. In March, the IRS reminded the public to fill their returns or to face penalties or criminal responsibilities. The letter seems to suggest that it is improper to impose enforce penalties and criminal charges against individuals who do not understand what they are required to do. The lawmakers want the agency to take the responsibility and ensure they do not punish the public needlessly for owning cryptocurrencies.
“While the Committee appreciates the IRS’s need to undertake enforcement actions to ensure that taxpayers generally meet their tax obligations, in this case, we are concerned that the IRS is seeking to enforce guidance that does not adequately advise taxpayers of their tax obligations when using virtual cunencies,” the letter noted. “Furthermore, while the issues surrounding virtual currencies are complicated and ever evolving, a key component of the IRS’s duties as the nation’s tax administrator is to assist taxpayers in understanding what their tax obligations are and how they may best meet them.”
IRS first imposed taxation on cryptocurrencies in 2014. During this time, only a few cryptocurrencies were being used to make a transaction. The legislators believe it is high time the IRS makes changes to adapt to the changes in the market.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post US lawmakers want IRS to clarify guidelines on crypto tax appeared first on Coingeek.
Five legislators in the United States have sent an open letter to the Internal Revenue Service (IRS), urging the tax agency to update its cryptocurrency tax guidelines.
The letter, sent last Wednesday, was the second of its kind from the House of Representatives’ Committee on Ways and Means. The first letter, sent on May 17, 2017, asked the IRS for its comprehensive strategy on digital currencies.
Now, representatives including David Schweikert, Darin LaHood, Kevin Brady, Lynn Jenking, and Brad Wenstrup are asking IRS Acting Commissioner David Kautter “to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using virtual currencies.”
In their latest letter, the bureaucrats stated that ever since the introduction of cryptocurrencies in the market, the IRS has struggled with how best to treat cryptocurrencies for tax purposes.
They believe the IRS has made “enforcement a priority,” making “robust enforcement actions on a number of fronts, instead of making the public understand everything they need to know about cryptocurrency taxation. In March, the IRS reminded the public to fill their returns or to face penalties or criminal responsibilities. The letter seems to suggest that it is improper to impose enforce penalties and criminal charges against individuals who do not understand what they are required to do. The lawmakers want the agency to take the responsibility and ensure they do not punish the public needlessly for owning cryptocurrencies.
“While the Committee appreciates the IRS’s need to undertake enforcement actions to ensure that taxpayers generally meet their tax obligations, in this case, we are concerned that the IRS is seeking to enforce guidance that does not adequately advise taxpayers of their tax obligations when using virtual cunencies,” the letter noted. “Furthermore, while the issues surrounding virtual currencies are complicated and ever evolving, a key component of the IRS’s duties as the nation’s tax administrator is to assist taxpayers in understanding what their tax obligations are and how they may best meet them.”
IRS first imposed taxation on cryptocurrencies in 2014. During this time, only a few cryptocurrencies were being used to make a transaction. The legislators believe it is high time the IRS makes changes to adapt to the changes in the market.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
The post US lawmakers want IRS to clarify guidelines on crypto tax appeared first on Coingeek.
