The Internal Revenue Service has asked Congress for more authority to request on Tuesday to report on the transactions of cryptocurrency exchanges and brokers, Bloomberg reports. The IRS hopes to use the collected data to develop regulations for the burgeoning crypto industry — if it can get the space’s biggest players to comply.
The organization made the request during the Senate Finance Committee hearing on the The IRS’ Proposed Fiscal Year 2022. IRS Commissioner Charles Rettig said the group is often challenged in its requests to report and “to get a clear dictate from Congress on the authority of [it] gathering that information is critical.”
A request from the IRS for actual power to do something about cryptocurrencies makes sense. Proposed legislation regulating the industry is piling up, especially since Biden took office. In December, the Financial Crimes Enforcement Network (FinCEN) proposed requiring exchanges to report information (such as names) associated with private anonymous crypto wallets that exchange more than $10,000 per day. It also suggested similar “know-your-customer” requirements on international transactions. The government’s goal seems to be to make exchanges work more like banks and cryptocurrencies themselves more like cash, as Forbes writes. Presumably with taxes would imply both.
The most recent case for that conceptual and legal review was a request from the US Treasury Department on May 20. The Treasury (of which the IRS is technically a part) has formally requested all exchanges to share information on transactions over $10,000. The report published by the department at the time claimed that “cryptocurrency is already posing a significant detection problem by enabling broadly illegal activities, including tax evasion.” Collecting data on those transactions could hopefully make that practice less enticing, and the IRS’s request makes it clear that it needs help.
However Congress and the IRS choose to move forward, the request is yet another example of the growing effort to take the wild west out of the cryptocurrency industry. With the popularity of crypto, there is bound to be more.