Government Spending Millions on Cryptocurrency Tracking
Diar, a crypto-asset analysis firm, released a report indicating various agencies of the US government have spent nearly $6 million dollars on discovering the identities of cryptocurrency users. At the top of the spending list is the IRS, which has spent upwards of $2.2 million on 9 contracts with cryptocurrency forensics advisors. Immigration and Customs Enforcement came in second, having spent $1.5 million, while the FBI is third with $1.1 million in spending. Chainalysis, a blockchain compliance and tracking company, is the recipient of 93% of crypto-related government spending.
Meanwhile, the IRS finds itself under from multiple members of congress for failing to have issued definitive guidance on the taxation of cryptocurrencies. In an open letter submitted September 19, Kevin Brady (R-TX), David Schweikert, (R-AZ), Brad Wenstrup (R-OH), Lynn Jenkins (R-KS), and Darin Hood (R-IL) jointly called on the IRS to cease enforcement activity until updated guidelines are issued, arguing the it has an obligation to clarify the rules before taxpayers can be reasonably expected to comply.
However, while it is unclear whether the IRS has any plans to issue new guidelines soon, In March they released a “reminder” that income from virtual currency transactions is taxable and should be included in taxpayer’s yearly tax filings.