Bitcoin, tax, and privacy

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It’s a funny thing when it comes to Bitcoin. Many early adopters saw Bitcoin as a tax-free haven. As a way to facilitate borderless payments outside the bounds of regulatory frameworks and tax laws. What many later came to learn is that Bitcoin tax in most countries is treated with the same vigor as property tax. Apparent in Bitcoin’s design is the traceability factor. We often say that Bitcoin is “pseudonymous.” That’s like saying it isn’t exactly anonymous, but nor is it outright giving your name away. Another way of saying it is that Bitcoin is private.

Privacy is a fundamental human right. It is even recognized as such in the UN Declaration of Human Rights and many other international treaties and declarations from various organisations. Then, it is found to be by any reasonable measure, a right that is on shared grounds to Freedom of Speech. Particularly now, more than ever, perhaps, in the midst of our global technological revolution, never has our privacy been under threat as it is today.

Bitcoin is built with privacy in mind. It is not an anonymous coin or ledger like many that have flourished over the past several years such as Monero or ZCash. Recently, several exchanges have felt the pinch of regulatory forces and have started delisting such anonymous tokens. Bitcoin itself remains safe.

Why?

I believe the crux of this reason is that Bitcoin remains magnitudes more transparent than your local bank. Think about that for a minute. The statement isn’t one made by some crypto-fanatic pushing an agenda; this is a fact of the Bitcoin blockchain. Every coin can ultimately be traced back to its mining birth. For this reason, the quintessential Bitcoin Whitepaper describes a coin as a “chain of signatures.”

Most governments around the world have come to sufficiently understand the transparent nature of the blockchain and have appropriately come to assess Bitcoin’s nature suitably. When it comes to tax laws, many governments around the world have come to treat it no different to property. Take, for example, the IRS position “For federal tax purposes; virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.” – That is, upon sale or trade of the asset, the transaction is subject to capital gains tax. Of course, there are also a few tax havens around the world, and on the other hand, there are some states (including Japan, Bolivia, Columbia) that have cryptocurrency tax laws that are incredibly severe. But worse are those that have banned Bitcoin (such as Egypt).

Severe measures against Bitcoin come from a lack of understanding the technology. If most governments understood the transparent nature of Bitcoin and how it could help them, they would jump at the opportunity to embrace the technology. Fear is often a motivator of a strong response. The moderate response is the one many countries have already adopted, likening Bitcoin to property.

Bitcoin doesn’t need to be feared, nor banned, nor should it be under a constant watchful eye. Surveillance is for things that are opaque and hidden. Bitcoin’s blockchain is transparent and can be audited on-demand on an as-need basis. And this is the beauty of Bitcoin’s design. It does not require a watchful eye nor an extreme response that requires its users to report the ongoing funds at every single address. Why? Because it is sufficient to declare the profit and loss on trades, and where there is a discrepancy, an audit can yield further information.

Excessive opposition will only drive users to move to dark web markets, and trade with anonymous coins where tracking becomes much more difficult. However, for Bitcoin, the overall response from the governments around the world has been somewhat encouraging ‘till now… As the most honest and transparent ledger the world has ever known, it is perhaps time that the world embraces this technology, rather than shy or fear it.

To embrace Bitcoin is to embrace its private nature, a fundamental human right. A ledger of truth can yield profound positive changes for the world, but it requires level-headedness. It requires a balance in law that protects users, but also provides visibility of those funding child abuses, terrorism or slavery.

Bitcoin, in the fulfilment of its purpose, will go some way not only to keep citizens honest but governments also. A transparent ledger keeps accountability of all parties – equally, irrespective of whether one is a politician, businessman, or thief.

Eli Afram
@justicemate

France cuts cryptocurrency capital gains tax in half

France cuts cryptocurrency capital gains tax in half

Regulators in France could be warming up to cryptocurrencies. The digital currency has been considered by the country’s tax officials to be “commercial and industrial property” since 2014 and, as such, administered a capital gains tax of 45% on its sale. After a fair amount of backlash and continued community support, that amount has now been lowered to a flat rate of 19%. Of course, there are certain exceptions.

A group of taxpayers had lobbied against the tax plan and took their grievance to the High Administrative Court earlier this year. The court listed, pondered and finally agreed, forcing the Council of State (COS) to change the rules, French media outlet Le Monde reported. Now, cryptocurrencies are considered movable property and lowered the taxes. The COS added, however, that any income gained from activities such as mining, not from the sale of cryptocurrency, would still be considered gains on commercial and industrial property and would be charged taxes at the higher bracket.

Cryptocurrency has been received in France with a certain amount of enthusiasm not seen in many other countries. In 2017, Robert Ophèle, chief of French stock market regulator AMF, signaled support for digital currency when he said that it could serve a legitimate business purpose. While the overall attitude may be favorable, there are still some in the country, such as Bank of France Governor Francois Villeroy de Galhau, who are calling for more emphasis on cryptocurrency exchanges.

de Galhau, who sought for a global approach to the markets, previously said, “In particular, we should work on exchanges and platforms which provide services at the interface between crypto-assets and the real economy.” In February, de Galhau was behind a movement, along with the finance ministers from both France and Germany, to have the G20 discuss how they could collectively begin to implement transnational regulation.

In the middle of March, French Minister of Finance and Economics Bruno Le Maire wrote an opinion piece, in which he stated: “A revolution is underway, of which bitcoin was only the precursor. The blockchain will offer new opportunities to our startups, for example with the Initial Coin Offerings (ICO) that will allow them to raise funds through ‘tokens,’ crypto-actives or not. It promises to create a network of trust without intermediaries, to offer increased traceability of transactions and, overall, to make the economy more efficient.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
Expect more price falls as tax deadline looms for US crypto owners

Expect more price falls as tax deadline looms for US crypto owners

As if the situation was not bad enough for cryptocurrency owners with prices plummeting as much as 80% from their all-time highs in some cases, further pressure on prices looms in the form of the April 15 tax deadline in the United States. A Reuters report quoted Fundstrat Global Advisors, which said the Internal Revenue Service (IRS) is owed as much as $25 million on capital gains taxes made on crypto currency prices which ballooned by over 1000% in some cases during 2017.

This tax deadline could lead to further selling pressure and correspondently on the prices of SegWit-Coin BTC (also known as Bitcoin Legacy or Core) and Ethereum, among others, in the short term. SegWit-Coin BTC is constantly losing value over the past days and a drop to the psychologically significant $6,000 is expected in the short term before a rebound. Ethereum has fared even worse trading at around $350, which is a full 300% less than its all-time high of $1,400 registered in January. Cryptocurrency owners are likely to continue selling off their holdings to convert to U.S. dollars to pay their taxes and this will probably put further pressure on prices, analysts said.

Commenting on the current situation regarding crypto currencies, Fundstrat co-founder and head of research Thomas Lee said: “We believe selling pressures (in crypto) have been amplified by capital gains tax-related selling this year.”

Fundstrat, however, remained bullish on SegWit-Coin BTC’s price in the short to medium term. Analysts reaffirmed its proposed target of $20,000 for the cryptocurrency by mid-year and $25,000 by end of year. Currently the coin’s price is around $6,600 with other cryptocurrencies also close to their 2018 lows. This is a far cry from the $20,000 price level it reached last December when growth fever had hit the crypto market in a big way. In fact, cryptocurrencies grew by no less than $590 million in 2017 compared with just $11 billion in 2016. Fundstrat also calculates that around 30% of cryptocurrency holders are in the United States.

Cryptocurrency exchanges who registered record profits in November and December 2017 are expected to face considerable tax liabilities. Fundstrat estimates the exchanges’ net income exceeded $1 billion in 2017 with most of the working capital kept in SegWit-Coin BTC or Ethereum. These currencies have to be converted to U.S. dollar in order to meet tax liabilities.

Note: Tokens in the SegWit chain are referred to as SegWit-Coin BTC (inaccurately called Bitcoin Legacy or Core by many) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

source: https://coingeek.com/expect-price-falls-tax-deadline-looms-us-crypto-owners/

Cryptocurrency tax guidelines coming soon to South Korea

Cryptocurrency tax guidelines coming soon to South Korea

South Koreans, get ready. According to the media outlet Fuji News Network (FNN), regulators could be ready to publish cryptocurrency tax guidelines as early as June. The Ministry of Strategy and Finance is said to be in the process of reviewing the policies and plan on making an announcement soon.

The good news is that any tax policies would not go into effect until next year, so at least there’s a little bit of warming up time. The announcement came following the G20 meeting held in Buenos Aires, Argentina, last month. During that meeting, a deadline of July was agreed upon for recommendations on a global cryptocurrency policy.

Currently, South Korean residents do not pay taxes on cryptocurrency. However, the exchanges do.  They pay a 22% corporate tax and a 2.2% local income tax, which is in line with what all corporations earning more than $18.7 million each year have to pay.

One proposal would be to tax profits made from the sale of cryptocurrency. That policy could be adapted to result in other tax liabilities if a transaction is deemed to be temporary and irregular. Deputy Prime Minister and Minister of Strategy and Finance Dong-yeon Kim has been looking at ways of taxing digital currency since last year, and is following the lead of other countries such as the US and Germany.

Following upcoming local elections in June, the South Korean government anticipates establishing complete cryptocurrency regulation. The Ministry of Finance and Economics has scheduled a conference for G20 members to be held on June 14, and an additional working session for the entire G20 international finance system scheduled for June 15.

The G20 meeting was expected to bring a clearer definition on the subject of cryptocurrencies. However, it would appear that there is still a great deal of confusion regarding their true place in the world economy. Following some pushback by several participants, it was decided that the group would hold off on establishing policy until more research was conducted.

Even after a consensus is reached, there is still the possibility that some G20 member nations won’t follow the guidelines. One country, Brazil, has already stated that it has no plans to regulate cryptocurrencies. The president of Brazil’s Central Bank, Ilan Goldfajn, told the others during the March meeting that it is highly unlikely that the South American country would adhere to cryptocurrency policies created by the group.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

source: https://coingeek.com/cryptocurrency-tax-guidelines-coming-soon-south-korea/

Digital currency is taxable

Digital currency is taxable, IRS reminds taxpayers

The U.S. Internal Revenue Service (IRS) has warned taxpayers about incurring penalties should they fail to report their cryptocurrency-related incomes. According to the tax agency, digital currencies are treated as property, which means they are taxable.

In its recent release, the IRS said payments made with cryptocurrency are subject to taxes, which will be levied on profits and losses made from trading in cryptocurrency, and will be known as capital gains tax. Taxpayers have until April 27 to file and pay their dues to the taxman.

Similarly, employee wages made in cryptocurrency will also be subjected to taxes. In relation to payments, any digital currency payments made to independent contractors and service providers must be reported to the agency through Form 1099. Also, wages paid to employees must be reported to the IRS through the W-2 form. The wages are subject to payroll, withholding, and income tax and should be reported by the employer.

The taxman also outlined the penalties for those who would not comply with the law. If found guilty of tax evasion, one will be convicted to a term of five years and fined $250,000, and those guilty of false tax returns will be jailed three years and fined $250,000.

According to IRS 2014 guidance, virtual currency is treated as property, hence the tax levies. Furthermore, general tax principles that apply to property transactions are the same principle applied to cryptocurrency transaction. The IRS guidance also touched on self-employed miners, saying, “Resulting from those activities constitute self-employment income and are subject to the self-employment tax.”

Recently, cryptocurrency exchange Coinbase has introduced a tool to help its cryptocurrency enthusiasts calculate the tax due. Because cryptocurrencies are seen as property by the U.S. government, capital gains taxes will apply to every transaction made using digital coins—from hundreds of thousands of dollars’ worth of investment to even a single $2 purchase.

Kirk Phillips, a tax professional specializing in cryptocurrencies described the process as a “coffee problem,” because “even if you were just buying a cup of coffee in bitcoin you would have to report every sale of bitcoin.”

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

source: https://coingeek.com/digital-currency-taxable-irs-reminds-taxpayers/

Coinbase introduces tax tool for cryptocurrency earnings

Coinbase introduces tax tool for cryptocurrency earnings

The largest cryptocurrency exchange in the United States, Coinbase has introduced a tool wherein one can calculate tax due in relation to Internal Revenue Service (IRS) guidelines regarding virtual currency earnings. Coinbase has also provided a step-by-step guide to calculate taxes with this tool, which is a very useful way of simplifying the often cumbersome and laborious procedure.

The first step is to establish a relatively complete view of trading activities so that the cost basis may be determined. You may click a button on the website that creates a detailed report which has all the transactions in the buy, sell, send and receive departments. These are associated with the Coinbase account and will provide a good snapshot of what needs to be submitted to the IRS.

Additionally, the report also provides a cost basis for purchases and proceeds for all the sales made through Coinbase with fees also included. This information is important to determine what gains or losses have been made. Coinbase also warns that payment reversals and refunds are usually not reflected in the report. The report is only created for Coinbase transactions so for a complete picture, one needs to create a similar report from other exchanges.

The second step would be to calculate the gains and losses, and Coinbase advises that it would be better for a tax professional to carry out this procedure. Relative gains and losses are calculated by subtracting the costs from each sale or exchange.

Since there is no standard guide from the IRS on how to file these taxes with regards to costs, Coinbase recommends two procedures that it calls FIFO (First in First Out) and SpecID or Specific Identification. The former assumes that the first assets that were purchased were also the first assets that were sold and exchanged. Apparently this is the most common approach used for traditional investments. With SpecID, the investor needs to specify what assets were sold and exchanged by informing a tax professional.

Adding the gains and losses from all of your sales and exchanges will give you your gain or loss for the year. Once the gains or losses for the year have been calculated, you are ready to file your taxes.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.
Bill to allow cryptocurrency for tax payments passes first reading

Bill to allow cryptocurrency for tax payments passes first reading

But will the IRS charge payers with capital gains tax on top of their payment for…well, taxes?

A bill allowing residents to pay their taxes in cryptocurrencies has just passed its first reading required in Arizona. Should it pass all three readings required, Arizona would be the first US state to implement the law, with Illinois and Georgia closely following their footsteps. The bill, according to Rep. Jeff Weninger, would make it more convenient for residents to settle their tax obligations and could also possibly attract more businesses into the state.

“It’s one of a litany of bills that we’re running that is sending a signal to everyone in the United States, and possibly throughout the world, that Arizona is going to be the place to be for block chain and digital currency technology in the future,” Arizona State Rep. Jeff Weninger said. “The ease of use, being able to do it in the middle of the night, being able to do it at home while you’re watching TV. I think in a few years this isn’t even going to be a question.”

While the volatility of cryptocurrencies has made it severely attractive due to the possibility of huge profits, government agencies receiving such payments are not likely to benefit from its trade potentials and are required to convert them into US dollars within 24 hours of receipt.

This sounds like a win for cryptocurrencies in general, but it brings to question a redundancy from the IRS. Under their virtual currency guidance, they say that cryptocurrencies will be treated like assets subject to capital gains tax. Transactions involving cryptocurrencies will be treated as if you are paying with property, which is will be subjected to capital gains tax apart from being subjected to VAT. Similarly, flipping between one cryptocurrency to another is considered a taxable transaction in itself. If Arizona finally approves this, will the IRS not budge and charge payers with capital gains tax on top of their payment for…well, taxes?

Confusion over how exactly to classify cryptocurrencies—and who will have final jurisdiction over them has been raging. Recently, a ruling by a district judge agreed in favour of the CFTC (Commodity Futures Trading Commission) that cryptocurrencies are commodities and therefore fall under the CFTC’s jurisdiction. But on the other hand, the Securities and Exchange Commission (SEC) classifies them as securities and is claiming authority over regulation.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.
No VAT for crypto: Germany treats digital coins as legal tender

No extra tax for crypto: Germany treats digital coins as legal tender

Unlike the US, Germany will treat cryptocurrencies as legal tender, much like Japan does.

The German Finance Ministry has stated that cryptocurrencies will be treated like legal tender when used as a payment method, and will follow the standard VAT rules like usual purchases, rather than capital gains tax.

“Virtual currencies (cryptocurrencies, e.g., Bitcoin) become the equivalent to legal means of payment, insofar as these so-called virtual currencies of those involved in the transaction as an alternative contractual and immediate means of payment have been accepted,” according to the court ruling.

Although transaction fees imposed by wallet providers and exchanges may be subjected to tax since these are service charges, miner rewards, private investors, and individual traders are free from tax burdens.

Germany has been trying to ease up on taxation headaches for cryptocurrency holders. If you hold cryptocurrencies for more than a year, it doesn’t matter how much profit you’ve made from it—you get to keep your full stash as they will not ask for a cut.

The same cannot be said of the US, unfortunately.

At the moment, the US Internal Revenue Service (IRS)—as well as Australia—treats cryptocurrencies not as currencies but as capital property, assets subject to capital gains tax. It is treated much like a stock rather than fiat. This means every time someone uses them to pay for a purchase, the transaction is treated as if the buyer sold a property (cryptocurrency) in exchange for dollars, and is therefore already considered a taxable transaction before the dollar equivalent is used to buy an item—which incurs another sales tax. Some argue that this is double taxation, while some say it’s not—but that it is a very convoluted, complicated, and utterly confusing way of going about taxation.

Under this rule, every time a user trades one cryptocurrency with another, it is considered a reportable capital transaction. At some point, it would become impossible to track how many reportable transactions each user has, even if they wanted to. This means countries like the US and Australia would have to keep up with the times lest they end up drowning in piles of paperwork that they can’t even accurately verify down the road.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.
The next big headache for investors? Taxes on your cryptocurrency

The next big headache for investors? Taxes on your cryptocurrency

With the Bitcoin and cryptocurrency craze affecting millions of people who are looking to get rich as quick as possible, one of the questions that is seemingly looming large on the horizon is what taxes are due on such transactions. The U.S. government already seems to be hovering over this issue with legislators angling to regulate this vast new market, although to be fair at around $500 billion, this is still relatively small fry.

Many people holding legacy Bitcoin (BTC) have seen massive gains, some becoming overnight millionaires after the currency soared more than 1,000% in value over the last 12 months. But now comes the less fun part: paying taxes. And some currencies such as Ripple have risen even more—by a massive 10,000% in some cases, too.

The main question which comes out of all this is,do you need to file paperwork for your cryptocurrency holdings?

The answer is yes. Everybody needs to pay taxes on any cryptocurrency transactions, according to Kirk Phillips, a tax professional specializing in cryptocurrencies. In fact, Phillips—who also goes by the moniker “The Bitcoin CPA”—said this applies whether have sold hundreds of thousands of dollars’ worth of coins or a made a single $2 purchase. The latter situation would seem to be slightly ludicrous, however.

Because BTC and other cryptocurrencies are seen as property by the U.S. government, capital gains taxes apply to every transaction made. “It can be very tedious,” Phillips was quoted by Market Watch as saying. “I call it the coffee problem: Even if you were just buying a cup of coffee in bitcoin you would have to report every sale of bitcoin.”

Each sale or purchase technically constitutes two transactions: selling property (bitcoin) and using the proceeds of that bitcoin sale to buy a product. For instance, a person who bought a $1 million home using Etherum would have to pay capital gains tax on the transaction as well as real-estate taxes.

The American Institute of Certified Public Accountants is sending the Internal Revenue Service (IRS) a letter requesting more clarity on cryptocurrencies and taxes, but Phillips said it is likely the government won’t comment, if at all, until closer to this year’s tax filing deadline. Because of this, he suggests people with large cryptocurrency holdings or many transactions to report wait before filing, in case the rules change.

The last time the IRS released guidelines on cryptocurrencies was just days before the individual filing deadline in April 2014. That’s almost four years ago and the value of the cryptocurrency market has increased by hundreds of billions since then. To be safe, Phillips suggested people work with an accountant, in particular one who specializes in cryptocurrency, especially if they have large holdings. “The more you have at stake, the more important it is to get professional advice,” he said.

For those who want to file taxes themselves, selling BTC is treated the same as selling property or any other capital asset. People must report each transaction in terms of whether it was a loss or a gain, which can be difficult given the volatility of cryptocurrencies. In fact with values changing drastically in just a few minutes, the practicality of such a system is well-nigh impossible.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true  Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.
Spain mulling ideas for blockchain

Spain mulling ideas for blockchain, crypto companies’ tax breaks

European Union countries are looking favorably on blockchain and crypto currencies in an attempt to shore up their economy. After Malta announced that it was looking to provide a safe legal environment for the operation of blockchain technology, it is now the turn of Spain to actively consider providing tax breaks for blockchain-based companies and by extension, cryptocurrency exchanges.

Proposals to introduce tax exemptions for companies using blockchain technologies and cryptocurrency have been put on the table in Spain. The ruling People’s Party is preparing new legislation that will also offer incentives to entrepreneurs raising funds through ICOs. If lawmakers adopt the amendments, investors will not be required to report crypto assets under a certain threshold. This will undoubtedly provide an excellent environment for those companies who wish to pursue their business in blockchain.

The People’s Party intends to seek experts’ advice to finalize and push through the legislation in parliament. The ruling majority will also study developments in other countries that have advanced further in adopting their legal frameworks. Switzerland was mentioned as an example in that respect, where the Alpine country has already become a leader in Europe after establishing a Crypto Valley in Zug and enacting guidelines on initial coin offerings (ICOs). However, Switzerland is a different ball game since it is already known for its financial secrecy so such proposals are definitely more adaptable there.

The authors of the bill are considering proposals to entice businessmen to use blockchain for crowd fundraising through ICOs. The draft also introduces tax breaks for small companies specializing in sectors such as 3D printing or data processing.

The new legislation may also include a threshold below which entrepreneurs would not be required to report a cryptocurrency investment. Spain’s markets and securities regulator is reportedly preparing the provisions for crypto investor protection.

“We want to set up Europe’s safest framework to invest in ICOs” the Spanish deputy said.

In a post published on his website in December, Minister Teodoro Garcia Egea attempted to win support for his ideas by educating the public about blockchain technology, which he compared to the institution of the public notary.

“A notary is a highly qualified and independent professional, who provides guarantees for security and legality,” according to the lawmaker, noting that in the Internet, these characteristics can be attributed to blockchains.

The blockchain technology does not replace the notary, but provides reliability, transparency and traceability for contracts between individuals beyond what notaries can do, Garcia Egea wrote. Blockchains do not replace the services of legal professionals and from regulatory point of view, and the technology is not a threat but a great opportunity to do a better job, the lawmaker added.

Note: Tokens in the SegWit chain are referred to as SegWit1X (BTC) and SegWit Gold (SWG) and are no longer Bitcoin. Bitcoin Cash (BCH) is the only true Bitcoin as intended by the original Satoshi white paper.  Bitcoin BCH is the only public block chain that offers safe and cheap microtransactions.

Troubled times ahead for Coinbase as IRS tax probe moves closer to approval

It’s been nearly a year since Coinbase embarked on a legal journey to stop the U.S. Internal Revenue Service (IRS) from getting its hands on customer transaction records, and recent proceedings do not bode well for the San Francisco-based startup.

Last week, several news outlets reported that U.S. Magistrate Judge Jacqueline Scott Corley indicated that the U.S. tax agency may be allowed a “limited investigation” into Coinbase customers who may have made money from cryptocurrency-based transactions.

After hearing the arguments brought forth by IRS lawyers, Corley reportedly said “it’s legitimate for them to investigate whether people are making money on their bitcoin purchases and paying taxes on any gains,” according to Bloomberg.

“I have to give tremendous discretion to the agency as to how they investigate,” the judge said, adding that Coinbase will likely be given time to appeal any decision that will be announced.

For the past 12 months, the tax agency has been vigorously pursuing Coinbase to submit records of all transactions that took place on its platform from 2013 to 2015 as part of the government’s investigation into possible tax fraud activities committed by U.S. residents who engaged in business with or through the exchange.

The U.S. government doesn’t suspect Coinbase of engaging in any wrongdoing, but the IRS argued in a court filing that “U.S. taxpayers, including Coinbase users, have made use of virtual currencies to avoid the reporting and payment of taxes,” hence the summons.

However, Coinbase not only refused to turn over the records—it also took the fight to block the “unjustified and invasive” summons back to court, where it was joined by two anonymous customers. Lawmakers including Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee, and Vern Buchanan and Kevin Brady, heads of the House Committee on Ways and Means, also called the attention of IRS Commissioner Josh Koskinen, telling him that the tax agency may have been overstepping its powers in the probe.

In July, the IRS announced that it will narrow down the summons to apply to users involved in at least the equivalent of $20,000 in any cryptocurrency-related transaction during the 2013-2015 period. The amended summons are also limited to name, address, tax identification number, date of birth, account opening records, copies of passport or driver’s license, all wallet addresses as well as the customer’s public keys for all of his or her accounts, wallets or vaults.

The fight is far from over, although the IRS’s decision to scale down its requests is already considered “a big win” for both Coinbase and its customers.

“The government initially sought private financial records of approximately 500,000 account holders. In response to Coinbase’s continuing fight, the IRS significantly reduced the scope of the summons to approximately 14,000 customers. Although this 97% reduction in impacted customers is a big win for our customers, the IRS still took Coinbase to court to obtain a sweeping set of customer records,” David Farmer, director of communications at Coinbase, wrote in a blog post.

Troubled times ahead for Coinbase as IRS tax probe moves closer to approval

It’s been nearly a year since Coinbase embarked on a legal journey to stop the U.S. Internal Revenue Service (IRS) from getting its hands on customer transaction records, and recent proceedings do not bode well for the San Francisco-based startup.

Last week, several news outlets reported that U.S. Magistrate Judge Jacqueline Scott Corley indicated that the U.S. tax agency may be allowed a “limited investigation” into Coinbase customers who may have made money from cryptocurrency-based transactions.

After hearing the arguments brought forth by IRS lawyers, Corley reportedly said “it’s legitimate for them to investigate whether people are making money on their bitcoin purchases and paying taxes on any gains,” according to Bloomberg.

“I have to give tremendous discretion to the agency as to how they investigate,” the judge said, adding that Coinbase will likely be given time to appeal any decision that will be announced.

For the past 12 months, the tax agency has been vigorously pursuing Coinbase to submit records of all transactions that took place on its platform from 2013 to 2015 as part of the government’s investigation into possible tax fraud activities committed by U.S. residents who engaged in business with or through the exchange.

The U.S. government doesn’t suspect Coinbase of engaging in any wrongdoing, but the IRS argued in a court filing that “U.S. taxpayers, including Coinbase users, have made use of virtual currencies to avoid the reporting and payment of taxes,” hence the summons.

However, Coinbase not only refused to turn over the records—it also took the fight to block the “unjustified and invasive” summons back to court, where it was joined by two anonymous customers. Lawmakers including Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee, and Vern Buchanan and Kevin Brady, heads of the House Committee on Ways and Means, also called the attention of IRS Commissioner Josh Koskinen, telling him that the tax agency may have been overstepping its powers in the probe.

In July, the IRS announced that it will narrow down the summons to apply to users involved in at least the equivalent of $20,000 in any cryptocurrency-related transaction during the 2013-2015 period. The amended summons are also limited to name, address, tax identification number, date of birth, account opening records, copies of passport or driver’s license, all wallet addresses as well as the customer’s public keys for all of his or her accounts, wallets or vaults.

The fight is far from over, although the IRS’s decision to scale down its requests is already considered “a big win” for both Coinbase and its customers.

“The government initially sought private financial records of approximately 500,000 account holders. In response to Coinbase’s continuing fight, the IRS significantly reduced the scope of the summons to approximately 14,000 customers. Although this 97% reduction in impacted customers is a big win for our customers, the IRS still took Coinbase to court to obtain a sweeping set of customer records,” David Farmer, director of communications at Coinbase, wrote in a blog post.