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The IRS Wants to Know More About Privacy-Enhancing Crypto Coins, Tools
America's tax collector is laying the groundwork for a possible assault on privacy-enhancing cryptocurrency technologies.
By Danny Nelson
Updated Apr 10, 2024, 2:48 a.m. Published Jul 2, 2020, 5:06 p.m.
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The Internal Revenue Service (IRS) is laying the groundwork for a possible assault on privacy-enhancing cryptocurrency technologies.
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- IRS-CI Cyber Crimes Unit challenged its “industry partners” to explain where the crypto tracing community stands on privacy coins, Layer 2 protocols, sidechains and the Schnorr signature algorithm in a June 30 Request for Information (RFI), as first reported by The Block.
- “There are few investigative resources for tracing transactions” that move across these privacy-enhancing vectors, the IRS said, noting a recent spike in illicit privacy coin use. “The CI Cyber Crimes program is working to get in front of this trend.”
- The IRS singled out the monero, zcash, dash, grin, komodo, verge and horizen privacy coins, sidechains Plasma and OmiseGo, and Layer 2 protocol networks Lightning, Raiden and Celer.
- What’s good for user privacy is bad for investigative efficacy: The IRS bemoaned the Bitcoin blockchain’s apparent plans to integrate Schnorr signatures, writing that such a move will undercut IRS agents’ current tracing techniques.
- The tax agency seeks estimates of how much it would cost to “support this initiative” as well as return on investment estimates.
