Kraken Begins Notifying Customers It Will Send Their Data to the IRS This November | CPT PPP Coverage

Kraken Begins Notifying Customers It Will Send Their Data to the IRS This November appeared on bitcoinmagazine.com by Bitcoin Magazine.

Cryptocurrency exchange Kraken is sending a letter to clients notifying them that after losing a lengthy court case, they will need to turn over sensitive data to the Internal Revenue Service (IRS) after a legal battle that began in May 2021.

Surfacing on Reddit this week, the letter follows a summons from the IRS, and is part of an ongoing effort by tax authorities to access information related to cryptocurrency transactions.

The IRS had initially demanded a range of records and data related to Kraken’s U.S. clients. In response, Kraken objected to the demands, emphasizing its commitment to maintaining client privacy. The exchange engaged in a lengthy litigation process to challenge the summons.

While Kraken was able to reduce the number of clients affected, the court ultimately ordered the exchange to produce information and transaction histories for clients who had transactions exceeding $20,000 in any single year from 2016 to 2020, making this one of the largest successful attempts by the U.S. government to obtain data on crypto investors.

Coinbase was the subject of a similar summons in 2018, albeit at a smaller scope. Circle as well was subjected to the same action in 2021, just before the action against Kraken. At almost the exact same time, the exchange Poloniex was forced to comply with a similar order.

In the wake of the recent rules proposals from FinCEN attempting to require more proactive data analysis, record keeping, and reporting of individuals transaction history moving forward, this push to fill in data gaps from the past should have users desiring privacy concerned about the scope of the picture tax authorities and other government agencies are attempting to assemble.

The scope that these data collection efforts grow to could have serious implications for the privacy of Bitcoin users, even those who opt not to engage with regulated or KYCed services by virtue of reducing the number of people they can blend in with.

For affected clients, this means that Kraken will have to provide the IRS with the following information: names, dates of birth, tax identification numbers, addresses, contact information, and transaction histories for the specified years.

Kraken expects to share this information with the IRS in early November 2023.

The exchange is advising Clients affected by this court order to consult with their tax advisors to address any potential tax liability related to their cryptocurrency transactions during those years. 

FEATURED ‘News of the Day’, as reported by public domain newswires.

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