- The IRS is seeking to closely monitor crypto transactions.
- It is seeking to automate and digitize its processes.
- Ensuring crypto compliance is a huge challenge.
IRS increased crypto transaction monitoring
The United States Internal Revenue Service (IRS) ) has released a statement that details its intention to monitor and trace cryptocurrency transactions using artificial intelligence and machine learning.
The Service seeks to automate its processes and streamline the process of regulation. With the increasing sophistication in technology generally and the crypto market, the IRS is forced to step up its game. One key reason for this notice is that the IRS wants to bin the archaic paper–based processes to a more robust digital system.
In the announcement it was stated that the Revenue Service gets its information from sources that are in public domain. Any process that would allow for analytics using open source data would be of great benefit to the Service.
Recently the Service summoned Poloniex exchange users. No wrongdoing was alleged but the service simply wanted to know those customers who had done crypto transactions in excess of $20,000. The authorities have been increasing their monitoring of crypto transactions for a while now.
Ensuring crypto compliance
The IRS had issued a statement as it relates to issuing crypto tax guidance. Several countries have done something similar, the latest being the United Kongdom. Although, even in the UK, the process is not an easy one. Native tokens of exchanges are quite a challenge to supervise. Privacy coins too are still a problem with those trying to regulate crypto taxes. In South Korea, privacy coins were banned outrightly. The United States IRS once offered CipherTrace a grant of $625,000 to crack the privacy protocol of Monero.