IRS goes after cryptobros who ‘forgot’ to report crypto investments

The last year of cryptocurrency investment has led to regulation and scrutiny from government bodies. Following the height of virtual currencies in 2021, American tax revenue service IRS will be going after cryptocurrency investments.

IRS vs Cryptocurrency

After a heavy year for the crypto industry, the American government has granted the IRS permission to collect crypto investment records. The move is said to help the tax firm to identify taxpayers who failed to report virtual earnings.

The IRS is primarily going after New York-based bank M.Y. Safra. This is because the bank infamously partnered with crypto broker SFOX, allowing users to easily invest in cryptocurrency coins.

After the deal, the IRS assumes that a large amount of SFOX of M.Y. Safra users have profited from crypto. Furthermore, it believes that those users have not paid or reported those profits.

The firm claims that SFOX has over 175,000 users that have transacted more than $12 billion in crypto. However, the amount of users who have to pay unreported crypto tax is believed to be around ten. In a statement, the agency said:

"The John Doe summons directs M.Y. Safra to produce records that will enable the IRS to identify U.S. taxpayers who were customers of SFOX and who engaged in cryptocurrency transactions that may not have been properly reported on tax returns.”

Read More: Even cryptobros are turning against NFTs

The start of heavier crypto regulation?

The IRS’ move to properly regulate tax on crypto assets is part of a new wave against virtual currency. Following Russia’s invasion of Ukraine, the United States government has been paying more attention to cryptocurrency.

After US sanctions were imposed against Russia, the country used crypto to bypass them. This has led US democrats such as Hillary Clinton to demand heavy regulation of the crypto industry and its ability to undermine political power.

The IRS’ first move against cryptocurrency isn’t as sweeping as many have called for. However, it is a first step towards actual regulation of the unstable and unruly market.

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