The Strategist

US authorities now can request information on Bitcoin accounts and transactions

12/01/2016 - 13:41

US court authorized the Federal Tax Service to request data on Bitcoin transactions and accounts, if they are related to US citizens. In particular, the authorities refer to Bitcoin wallets in Coinbase service. Watchdogs suspect that some people could use the service to dodge taxes.

BTC Keychain
BTC Keychain
On Wednesday, the Federal Court for the Northern District of California ruled that the US Internal Revenue Service (IRS) may request information about transactions committed in Bitcoin by US citizens, and their Bitcoin accounts. The judgment concerns Coinbase service. This is a Bitcoin exchange and wallet, provides an opportunity to trade using the cryptocurrency. The IRS and the US Department of Justice demanded that Coinbase reveal data on transactions committed in Bitcoin from 2013 to 2015. According to the authorities, the service could help some people evade taxes. At the same time, the watchdogs have no evidence of tax evasion made through Coinbase, or violation on the service’s part.

Head of the Tax Division of US Department of Justice Caroline Ciraolo says: "As use of virtual currency is growing exponentially, the question about compliance with the tax laws was raised." In her opinion, the court's decision "sends a clear message to American taxpayers: whatever currency they use, Bitcoins or traditional dollars and cents, we will work to provide full accounting of all income and payment of fair share of taxes."

Now, there are about 5 million online wallets Coinbase. The IRS requirements concern end of last year, when there were 3 million wallets. In 2014, the IRS announced that it would consider Bitcoin as property (not as currency) for tax purposes, which means that owners should abide the same rules that apply to securities. However, given anonymity of the cryptocurrency, US authorities suspect that Bitcoins can be used for tax evasion.

The cryptocurrency continues to gain popularity around the world. In late November, international Bitcoin wallet Blockchain registered its 10 millionth digital wallet. This was announced by the company’s co-founder and CEO Peter Smith.

"After Brexit voting, US presidential elections and weakening of the RMB, we have seen an unprecedented level of activity and transactions on our platform," - said Smith.

In contrast to previous months, the company registered increased number of applications for Bitcoin walets in November, especially after unexpected victory of Donald Trump in the United States. A similar situation was observed after publication of the referendum’s results in the UK in June.

"People basically want to insure themselves against economic instability. This is an anxious time for the British pound ... people are "fleeing" to safe assets, and Bitcoin is one of them ", - said Smith.

Blockchain allows users to download software into their computers by opening a digital wallet to store Bitcoin cryptocurrency.
Blockchain Company is the world's largest supplier of digital Bitcoin wallets, with a market share of more than 50%. Every day, the platform leverages more than 150 thousand transactions.