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Kraken set to share user details with the IRS by November

Kraken

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TL;DR

  • Kraken has informed its users that it will disclose user details to the IRS by next month.
  • Striking a balance amid regulatory scrutiny.

Kraken, a prominent cryptocurrency exchange, recently announced its compliance with a court order to share data on tens of thousands of its users with the Internal Revenue Service (IRS). The company is set to disclose information regarding cryptocurrency transactions surpassing $20,000 made by its customers between 2016 and 2020. For U.S.-based users involved in such transactions, their account history along with personal details such as name, date of birth, Tax ID, address, and contact information will be provided to the IRS.

Kraken notifies users about the update via email

Kraken took the step of informing all affected customers via email, affirming the intended sharing of user data with the IRS in early November. The decision follows a federal court’s ruling in June, ending a two-year legal battle between the privacy-conscious crypto firm and the U.S. government regarding data sharing. Legal documents in the case outlined that 42,017 Kraken accounts would be impacted by the court’s order. Despite Kraken’s initial resistance to providing the IRS with the requested information, the company is portraying this development as a victory for privacy advocates.

The crypto exchange frames its legal battle with the IRS as a successful effort that prevented the IRS from acquiring extensive personal data from users. The company emphasized its objection to the intrusive nature of the IRS’s demands during the legal proceedings. Kraken’s stance was against sharing unnecessary information about U.S. clients, which included IP addresses, employment details, sources of wealth, net worth, and banking information. The exchange states that it persuaded the court to reject these excessive demands and asserts its commitment to defending the privacy of its clients.

Striking a balance amid regulatory scrutiny

This instance isn’t an isolated event in the crypto industry. Kraken joins the ranks of other crypto firms that have faced similar demands from the IRS. Notably, American crypto exchange Coinbase was previously directed by a federal judge in 2018 to provide select user data to the tax-collecting agency. In 2020, the IRS was granted legal authority by another federal court to scrutinize the records of the crypto payments company Circle, seeking data related to transactions of $20,000 or more conducted between 2016 and 2020.

Moreover, in the past year, the agency obtained a court order to request comparable information from the crypto prime brokerage SFOX. The trend of regulatory scrutiny and requests for user data within the crypto industry highlights the ongoing battle between government agencies and privacy-oriented crypto companies. As the IRS continues its pursuit of information on high-value crypto transactions, these instances reflect the balancing act between regulatory compliance and the protection of user privacy within the cryptocurrency landscape.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Owotunse Adebayo

Adebayo loves to keep tab of exciting projects in the blockchain space. He is a seasoned writer who has written tons of articles about cryptocurrencies and blockchain.

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