Regulators throughout the world had been struggling with the complexities of the cryptocurrency industry. Because the blockchain technology is novel and not widely understood, regulating the market had not been an easy feat.
A federal court in California has ordered the cryptocurrency exchange to provide information about users who have conducted transactions worth $20,000 or more in a year to the Internal Revenue Service in lieu with the “John Doe” summons that the IRS had gotten approved earlier.
Where South Korea has launched a crackdown of its own on the cryptocurrency industry because of increased tax evasion and money laundering, the US is not lagging far behind. The Internal Revenue Service had held the cryptocurrency industry accountable for almost $1 trillion uncollected taxes. The tax authority has more than disdain for the crypto sphere and has launched a crackdown of its own. The IRS had gotten “John Doe” summons approved earlier which gives the tax regulator immense power.
However, after a brief cool down the regulator has once again resumed its crackdown with full force. Utilisng the John Dow summons, the Internal Revenue Service had gotten approval from a North California federal court to access the accounts of users with more than $20,000 transactions worth on the leading crypto exchange, Kraken.
Crypto holders are obligated to meet the same tax obligations – which many are not. The John Doe summons are an effort of the regulator to bring equity to the industry and punish tax evaders. The John Doe summons allow the IRS information about all taxpayers in a specified class – say, with transactions worth $20,000 and above. With the immense power of the John Doe summons, the IRS is set to take the crackdown on cryptocurrency industry to the next level.