The IRS has already seized $1.2 billion worth of cryptocurrencies in 2021 that have been used for illicit purposes, which is almost ten times as much as last year.
According to a report by CNBC, the United States Internal Revenue Service (IRS) has seized over $1.2 billion worth of cryptocurrencies in this fiscal year. Jarod Koopman, Director of the IRS’ cybercrime unit, spoke to the outlet, saying it has gone up from $137 million in 2020 — nearly a 10x increase from last year.
“In fiscal year 2019, we had about $700,000 worth of crypto seizures. In 2020, it was up to $137 million. And so far in 2021, we’re at $1.2 billion,”
The U.S. government has sold seized cryptocurrency in the past, most notably from when it brought down dark web marketplace Silk Road. These cryptocurrencies are sold in auctions that often include other kinds of assets, like expensive cars and boats.
The IRS is one of many agencies that are diverting a lot of resources towards crypto. It has worked with companies in the past to bolster its oversight of the crypto market, providing Chainalysis with a $625,000 grant to break the privacy-preserving transactions of Monero. The agency has also asked for a $32 million budget to help deal with the crypto market.
Cybercrimes have become a hot topic in the wider world and the crypto space as authorities attempt to clamp down on the use of cryptocurrencies for illicit activities. The Colonial Pipeline infrastructure attack was by far the most notorious of these incidents this year, and it spurred a multi-organizational effort to tackle the problem.
US upping its scrutiny of crypto markets
Authorities are currently in the midst of figuring out how to impose practical regulations. The crypto market, because of its decentralized nature, can be hard to regulate. But various governmental agencies have been inching their way to effective measures.
The IRS clarified a question relating to cryptocurrencies in its 1040 tax returns form, giving taxpayers some relief. Multiple companies within the blockchain space are also designing and developing tax reporting tools to make it easier for retail investors.
The new infrastructure bill is also set to offset some of that cost with enforcement of taxation on crypto. The bill was criticized for its wording by Senator Pat Toomey, who promised to offer an amended version later. These signs point towards an inevitable regulatory framework by the U.S. government, which will include specific taxation guidelines.