The Internal Revenue Service asked Congress for more authority to request reporting on the transactions of cryptocurrency exchanges and brokers on Tuesday, Bloomberg reports. The IRS hopes to use the data it collects to develop regulations for the fast-growing crypto industry — if it’s able to get the space’s biggest players to comply.
The organization made the request during the Senate Finance Committee’s hearing on the IRS’s proposed Fiscal Year 2022 budget. IRS Commissioner Charles Rettig said that the group is challenged frequently in its requests for reporting and “to have a clear dictate from Congress on the authority of [it] to collect that information is critical.”
A request from the IRS for actual power to do something about cryptocurrencies makes sense. Proposed legislation regulating the industry has been piling up, especially since Biden took office. In December, the Financial Crimes Enforcement Network (FinCEN) proposed requiring exchanges to report information (like names, for instance) connected to private anonymous crypto wallets exchanging over $10,000 in a day. It also proposed similar “know-your-customer” requirements on international transactions. The goal of the government seems to be to make exchanges work more like banks and cryptocurrencies themselves more like cash, as Forbes writes. Presumably, with the taxes both would imply.
The most recent case for that conceptual and legal reframing was a request from the US Treasury Department on May 20th. The Treasury (of which the IRS is technically a part) formally requested all exchanges to share information on transactions over $10,000. The report the department published at the time claimed that “cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.” Collecting data on those transactions could hopefully make that practice less enticing and the IRS’s request makes it clear it’ll need help.
However Congress and the IRS choose to move forward, the request is yet another example of the growing effort to take the wild out of the cryptocurrency industry’s Wild West. With the popularity of crypto, there’s bound to be more.