Coindesk Logo

The IRS Wants to Know More About Privacy-Enhancing Crypto Coins, Tools

The IRS Wants to Know More About Privacy-Enhancing Crypto Coins, Tools

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.

America's tax collector is laying the groundwork for a possible assault on privacy-enhancing cryptocurrency technologies.

America's tax collector is laying the groundwork for a possible assault on privacy-enhancing cryptocurrency technologies.

AccessTimeIconJul 2, 2020, 5:06 PM
Updated Aug 19, 2021, 2:54 AM

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

The Internal Revenue Service (IRS) is laying the groundwork for a possible assault on privacy-enhancing cryptocurrency technologies.

  • 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.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.