IRS Calls On Kraken To Disclose User Data for Tax Compliance

Kraken, a cryptocurrency exchange, has been instructed to share information about users who conducted transactions over $20,000 in a single year. 

This requirement ensures compliance with tax regulations and enhances transparency in large cryptocurrency transactions. Kraken’s cooperation will help the authorities monitor and regulate high-value crypto transactions for tax purposes.

IRS Pursues Tax Investigation on Kraken Users for Crypto Transactions

A court in California has ordered Kraken, a crypto exchange, to provide account and transaction information to the IRS. The IRS wants to check if any Kraken users have not reported their taxes correctly.

Per an order issued on Friday, June 30, Kraken must provide specific user information. Users whose transactions exceeded $20,000 within a calendar year. 

This includes their names, birthdates, taxpayer identification numbers, addresses, phone numbers, email addresses, and other documents.

The IRS filed a court petition in California after Kraken settled with the SEC for securities law violations. Kraken didn’t give the IRS this information in 2021, when it asked for it. Apparently, the IRS wants to investigate users who transacted crypto between 2016 and 2020.

Kraken may need to provide the IRS with blockchain addresses and transaction details. Raw data may also be requested from the exchange.

Some of the IRS’s requests, particularly about employment information and wealth sources, were rejected by Judge Joseph Spero.

In his ruling, the judge said the court should ensure the summons is focused and doesn’t go overboard.

It was ordered that the IRS narrow the scope of its summons. The judge said the court should make sure the IRS doesn’t make

Overly burdensome requests that aren’t proportional to the investigation.

Court Limits IRS in Identifying Kraken Users, US Crypto Regulations Gain Momentum

According to the court, the IRS’s first three requests to identify Kraken account holders were too broad and unnecessary for most users to prove their identity.

During a time when the United States is trying to regulate cryptocurrencies, this ruling favors the government. Recent SEC lawsuits accuse Coinbase and Binance.US of mishandling customer funds, misleading investors and regulators, and violating securities laws.

Investing in cryptocurrencies needs to be regulated and overseen properly. The ruling helps protect U.S. citizens from any potential illegal activities in cryptocurrency.

Cryptocurrency exchanges need to be regulated and monitored better to reduce the risk of money laundering. Investing in a transparent and accountable industry protects investors as well. Moreover, it protects U.S. financial integrity.