Kraken to Share User Data with IRS
Crypto exchange Kraken has announced that it will comply with a June court order and share data on tens of thousands of its users with the Internal Revenue Service (IRS). The company will provide information about cryptocurrency transactions above $20,000 made by Kraken customers between 2016 and 2020. This includes the name, date of birth, Tax ID, address, and contact information of U.S.-based users who made such transactions. All affected Kraken customers have been notified via email.
In a statement to Decrypt, a Kraken spokesperson confirmed the development and stated that the user information will be shared in early November. This decision comes after a two-year legal battle between Kraken and the federal government over data sharing. The court ruling impacts 42,017 Kraken accounts.
Victory for Privacy Advocates
While Kraken initially resisted providing the IRS with this information, the company is now framing it as a victory for privacy advocates. Kraken argues that it successfully prevented the IRS from obtaining intrusive and unnecessary information about its clients, such as IP addresses, employment details, sources of wealth, net worth, and banking information.
This is not the first time a crypto company has been compelled to comply with the IRS. In 2018, American exchange Coinbase was ordered to supply select user data to the tax agency. Additionally, in 2020, the IRS gained legal authority to access records from Circle and SFOX related to cryptocurrency transactions over $20,000 between 2016 and 2020.
Hot Take: Protecting Privacy Amidst Regulatory Pressure
The decision by Kraken to share user data with the IRS marks another instance of regulatory pressure on crypto exchanges. While complying with the court order, Kraken emphasizes its efforts to protect the privacy of its clients and limit the scope of information provided. This case highlights the ongoing tension between government authorities seeking more transparency in the crypto space and privacy advocates who aim to safeguard users’ personal data. As the crypto industry continues to evolve, finding a balance between regulatory requirements and preserving individual privacy will remain a significant challenge.
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