17 April 2021
The IRS has gained Authorization to ask two companies, Circle and Poloniex, to share data of their U.S. based investors.
U.S. Department of Justice (DoJ)- a federal court in the Massachusetts District has authorized the Internal Revenue Service (IRS) to send summon to the Boston-based blockchain payments firm Circle and its former subsidiary Poloniex.
This action will ask Circle and Poloniex to share data of U.S.-based customers who conducted crypto transactions above $20,000 between 2016 and 2020. Such type of order is known as a “John Doe summons”- an investigative tool specially deployed by the IRS to seek data of specific U.S. individuals who have failed to obey the federal tax laws.
“The John Doe summons is a step to enable the IRS to uncover those who are failing to report their virtual currency transactions properly. We will enforce the law where we find systemic non-compliance or fraud,” IRS Commissioner Chuck Rettig writes.
The DoJ’s official announcement notified that it does not allege that Circle was involved in any suspicious activities. This action is part of an “investigation of an ascertainable group or class of persons” that the agency anticipates are non-compliant with U.S. tax laws.
Additionally, the order is an example of how U.S. regulators have increased their efforts to monitor the cryptocurrency sector strictly. In previous years, crypto exchange Coinbase is well-known for cooperating with the IRS and reporting user trading activity.
Apart from IRS’s efforts, the U.S. Treasury and FinCEN have also planned to enforce KYC rules for self-hosted crypto wallets. The regulation will make it compulsory for U.S. cryptocurrency firms to record personal data of transactions above $3,000 and also report crypto transactions over $10,000.
Disclaimer: The author’s views and opinions are for informational purposes only and do not constitute financial, investment, or other advice.