IRS and DOJ Cryptocurrency Surveillance
As the Internal Revenue Service (IRS) pushes forward with its proposal to increase cryptocurrency surveillance, a past report might offer a clue for how this information may be used in practice. In short, with the IRS set to keep tabs on Americansβ cryptocurrency usage through an expected 8 billion new returns, it seems the Department of Justice (DOJ) may soon have the tools it wants to start confiscating cryptocurrency at an unprecedented rate.
The 2022 Report
The issue stems from a 2022 report written by the DOJ in response to Executive Order 14067, President Bidenβs first major cryptocurrency initiative. The report covered recommendations to aid prosecutions, improve investigations, expand penalties for cryptocurrency-related crimes, and increase resources available for government employees.
DOJ’s Argument for Seizing Cryptocurrency
Whatβs most interesting for the present conversation is where the DOJ argued for increasing its ability to seize cryptocurrency. For example, the report states that βit is critical that the United States have the authority to forfeit the proceeds of cryptocurrency fraud and manipulation as a means of deterring such activity and divesting violators of their ill-gotten gains.β Therefore, the DOJ recommends expanding its authority over criminal, civil, and administrative forfeiture.
Lack of Evidence Supporting DOJ’s Argument
Yet this argument is difficult to understand considering how much and how often the government has been able to seize cryptocurrency over the years. In fact, between 2014 and 2022, the FBI seized around $427 million in cryptocurrency. The IRS seized another $3.8 billion between 2018-21. With more than $4 billion on hand, the DOJβs argument that the U.S. government is struggling to seize cryptocurrency is just not as apparent as the reportβs recommendations make it out to be.
Impact of IRS Proposal
Still, the IRSβs broker proposal puts the DOJβs report into a new light given the vast surveillance that the proposal would likely create β vast surveillance that could be used to start confiscating cryptocurrency at an even greater rate.
Risks of Mass Data Collection
With the IRS collecting vast amounts of new information on Americansβ cryptocurrency use, itβs possible that the DOJ may βsuddenlyβ find vast new arenas for cryptocurrency confiscation. And again, itβs important to stress that these confiscations donβt have to start with an actual crime being committedβjust mere suspicion.
Closing Subheading: Hot Take
If the IRS pushes forward with its proposal, cryptocurrency users should keep a careful eye on how that data is ultimately used by the government at large.
Coinan Porter stands as a notable crypto analyst, accomplished researcher, and adept editor, carving a significant niche in the realm of cryptocurrency. As a skilled crypto analyst and researcher, Coinan’s insights delve deep into the intricacies of digital assets, resonating with a wide audience. His analytical prowess is complemented by his editorial finesse, allowing him to transform complex crypto information into digestible formats. Coinan’s contributions serve as a valuable resource for both seasoned enthusiasts and newcomers, guiding them through the dynamic landscape of cryptocurrencies with well-researched perspectives. With meticulous attention to detail, he empowers informed decision-making in the ever-evolving crypto sphere.
