As of Tuesday, November 27th, the popular cryptocurrency trading platform known as Coinbase was ordered by a Californian federal court to turn over the names and records of over thousands of customers to the Internal Revenue Service. The request consisted of name, birthdate, address, and all of their account activity for any users who bought, sold, sent, or received more than $20,000 worth of Bitcoin between the years of 2013 and 2015.
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This order comes after a year-long battle between the two for the information. In November of 2016, the court ordered the same thing from Coinbase, but customer resistance led to them giving up on the request. The request was then narrowed down to the aforementioned $20,000 threshold, for the specified time period above. According to one Coinbase audit from July of this year, around 14,000 of the affected users had conducted over $60,000 worth of business between 2013 and 2015.
This means that they are quite small in the scheme of investing, but overall still represent a large amount of taxable income for the IRS. The CEO of Coinbase, Brian Armstrong stated that “asking for detailed transaction information on so many people, simply for using digital currency, is a violation of [customers’] privacy, and is not the best way for us to accomplish our mutual objective.”
US citizens are by law, supposed to pay what is known as capital gains tax on transactions in the cryptocurrency space. Due to the fact that the IRS labels cryptocurrency as a form of property, those who invest need to pay the taxes of such. Thus far, there have only been around 800 to 900 taxpayers per year who have actually paid this tax, and it does not look like it will be increasing anytime soon.