Things are not looking all that great for Coinbase exchange users right now. About a week ago, the IRS mentioned they were inquiring about Coinbase users between 2013 and 2015. Requesting these details requires approval from a court, which has now been granted by a federal court in the Northern District of California.
IRS Will Investigate Coinbase Users In The Coming Months
The John Doe summons issued by the IRS will have significant consequences for the Coinbase exchange and its users. Based on the thought that some people may have used Bitcoin to evade paying taxes, the exchange is now being targeted for a “routine check”. However, no one knows what the IRS may uncover during their investigation.
But that is not the only concern, as anyone who used the Coinbase platform between 2013 and 2015 will be scrutinized. It does not matter if one’s account has closed in the meantime, the company still has logs and records of all transactions. Although it is doubtful anyone used Bitcoin to evade taxes, it will be intriguing to see what results the investigation will yield in the coming months.
The decision to grant court approval for this summons was made by Judge Jacqueline Scott Corley. Apparently, her decision was based on the supporting documents associated with the petition, indicating the IRS has made a strong case against Coinbase and its users. This does not automatically mean there is a guilty party, though, but there is enough cause to warrant a full third-party audit of the company’s records.
Assuming Coinbase failed to prevent tax evasion through their Bitcoin exchange platform, things will not be looking food for them moving forward. Complying with regulation and financial policies is always priority number one for an exchange, and Coinbase has done a fairly good job so far. Or so they have always claimed, at last, yet the investigation may yield a very different result.
At the same time, this seems to be a ploy by the IRS to ensure. Bitcoin users are taxed on their transactions in the US as well. Whether this will affect Bitcoin usage in the US, remains to be seen, though, but it is possible the IRS wants to introduce new cryptocurrency guidelines in the future. Tax compliance in the cryptocurrency world is rather ambiguous right now, and the IRS may want to develop a new strategy related to Bitcoin.
The important thing to remember is how this investigation will not necessarily affect bitcoin adoption around the world. Regardless of what the outcome may be, this new does not reflect badly on Bitcoin, but is rather a governmental effort to introduce compliance to cryptocurrency. How fruitful those efforts will be, remains a topic of debate, though.
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