The U.S. Internal Revenue Service — the department responsible for collecting tax revenue — seized US$3.5 billion worth of cryptocurrencies during fiscal year 2021, accounting for 93% all assets seized by tax enforcement that year, according to the agency’s 2021 Criminal Investigation Report released Thursday.
- An agency official said on a call with reporters the IRS could expect to seize billions of dollars more worth of cryptocurrency linked to tax fraud and other crimes going forward as recent and pending legislation in the U.S. increases reporting requirements and grants the agency further funding. “I expect a trend of crypto seizures to continue as we move forward into fiscal year ‘22,” IRS Criminal Investigation Chief Jim Lee said on a call with reporters. “We’re seeing crypto involved in a number of our crimes as we move forward.”
- The US$1 trillion bipartisan infrastructure bill that President Joe Biden signed into law on Monday included a controversial provision aimed at raising a projected US$28 billion to fund the bill by increasing the reporting requirements for any cryptocurrency “broker.” The bill takes a particularly wide view of what constitutes a broker, however, defining it as “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”
- This has left many concerned that this definition would include network validators who by the very nature of the technology do not collect the information required to be compliant with the language in the bill. After the signing of the bill, Senator Cynthia Lummis introduced a separate bill to address this crypto provision.
- In the past 24 months, the IRS has made such seizures as US$1 billion from the now-defunct Silk Road, an operation on the dark web that was shut down in 2013 that accepted Bitcoin to ship illicit substances all over the globe. The agency also prosecuted a former Microsoft employee who embezzled US$10 million from the company using cryptocurrency.