IRS Investigations On Cryptocurrency Holders Are A Good Thing – Opinion

Blockchain, Opinion, Regulation | December 15, 2017 By:

Alexander Legoshin has over 10 years experience in strategic marketing and software development, and a history of working in the financial industry.  Alexander has been a blockchain enthusiast and investor since 2013, and his new company offers trading in cryptocurrency and fiat.

There’s a cryptocurrency gold rush going on right now, and, as many of you may have heard, Coinbase, a US-based digital currency exchange boasting over 13 million users, was recently ordered to give the IRS data on users trading $20,000 or more.

With the recent surges in cryptocurrency prices, we can be sure that many people trading on them have volumes of over $20,000. In fact, trading cryptocurrencies is becoming more and more like a professional finance job, and with the IRS taking a look under the hood, it only goes further to legitimize the use of cryptocurrencies.

The IRS has long been cooperating with companies that provide services to analyze blockchain transactions. At the moment, it’s already possible, with the help of these technologies, to identify and link approximately 40% of wallets to genuine legal or physical persons.

This step taken by the IRS is aimed at de-anonymizing blockchain transactions for the subsequent ability to tax income from operations in cryptocurrencies. On the one hand, the IRS action will hit those who do not pay their taxes, but on the other, it’s one more step toward recognizing and popularizing cryptocurrencies, as their usage becomes more transparent.

Transparency is a key issue for cryptocurrencies, because it’s one of the main barriers keeping people from using them. A lot of people have heard things about how you can trace coins, and, to them, it sounds like this is connected to cybercrime, or money laundering, or something else quite nefarious.

But as the transparency of these cryptocurrencies grows, we can be more and more certain of the legitimate sources of the capital in them. As the IRS ramps up its scrutiny of cryptocurrencies, we can say with more confidence that they are being used for normal, legal transactions. Indeed, even the SEC has joined the party, and has issued a statement about how it will evaluate which cryptocurrencies it deems are not in fact currencies, but securities.

Bitcoin is losing popularity among users seeking to hide their income or seeking to carry out illegal monetary transactions. More and more people are beginning to use the technology for its intended purpose: to preserve value and to make fast international payments. This trend has been particularly noticeable over the past few months, when the mass adaptation of

Bitcoin among ordinary people, not just Early Adopters, began. Due to this fact, Bitcoin has been going parabolic since early last month.

What we have to admit is that there is a lot of uncertainty around cryptocurrencies, because they are a new and revolutionary technology. Not since we left the gold standard has there been a currency that isn’t reliant on a government for its support (and in fact the opposite). Opinions vary greatly on what intrinsic value these cryptocurrencies have and how they should be governed. One thing for sure is that as governments get involved in regulating and policing transactions in cryptocurrencies, they become more reliable, transparent and secure for everyone to use.