Bloomberg reports that the Internal Revenue Service requested greater authority Tuesday to ask cryptocurrency exchanges and brokers for reports on their transactions.
Assuming that it is able to convince the space’s biggest players to comply, the IRS will use the data it collects to devise regulations for the crypto industry.
Senators on the Senate Finance Committee heard the organization’s request during its hearing on the IRS’s proposed fiscal year 2022 budget. Commissioner Charles Rettig says the group is often challenged by Congress in its reporting requests and “a clear mandate from Congress on its authority to collect this information is critical.”
The IRS should be given the authority to do something about cryptocurrencies. Since Biden became president, legislation regulating this industry has been piling up. The Agency for Financial Crimes Enforcement (FinCEN) proposed in December that bitcoin exchanges report information (such as names) related to the exchange of over $10,000 per day between anonymous crypto wallets.
Similarly, “know-your-customer” requirements were recommended for international transactions. Forbes reports that the government wants to make cryptocurrency exchanges more like banks, and cryptocurrencies themselves more like cash. Both would presumably entail taxes.
US Treasury Department requested that conceptual and legal restructuring on May 20th. Tax authorities (including the IRS) requested that exchanges share data on transactions over $10,000 in a formal request to the Treasury.
According to the report the department published at the time, “cryptocurrency already facilitates illegal activity, including tax evasion.” Collecting data on those transactions could hopefully discourage tax evasion, and the IRS’ request makes it clear it will need assistance.
This request is only another indication of the need to take the wild out of crypto’s Wild West, whichever way Congress and the IRS choose to proceed. Crypto is gaining popularity, so there are bound to be more.