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In a federal ruling on tuesday a judge in San Francisco ordered Coinbase, one of the leading crypto-currency exchanges in the US, to supply the IRS with the information of around 14,000 traders in crypto-curency. The IRS filed the appeal after only 800 to 900 US citizens allegedly reported capital gains between 2013-2015 by investing in bitcoin or other crypto-currencies.
The personal information, full balance and transaction log of any client of Coinbase with at least one transaction worth than the equivalent of $20.000 is ordered to be provided to the tax authority. While Bitcoin recently broke through the price of $10,000 each, it is expected that that the IRS will use the Coinbase account holders’ information to pursue those who have not paid federal taxes on their virtual currency profits. Also, this ruling might serve as a precedent for other crypto-currency exchanges.
The time of virtual exchanges existing in the shadow realm is over and it could be argued that the possibility of taxing crypto profits is the next step in the legitimization of crypto-currencies.
Wim Maas is a lecturer at the Department of Accountancy at Tilburg University, The Netherlands. His interests include the implementation of distributed ledger technology for financial accounting and reporting purposes.