The changes in the US regulation for crypto assets have forced key industrial players to adopt new strategies to improve their compliance levels. In a recent update, Kraken revealed plans to share users’ data with revenue regulators, the Internal Revenue Service (IRS).
In June, a federal court in the US ordered Kraken to share customers’ data with the IRS. The court report demonstrated that Kraken will disclose customer personal details and social security numbers to the IRS.
Kraken Violates IRS Tax Requirements
The court instructed Kraken to provide the customers’ details for any transaction amounting to $20,000 between 2016 and 2020. The court decision emanated from the multiple incidents where Kraken denied the IRS access to the customer’s report.
Also, Kraken was accused of failing to meet its tax obligation requirement. Before the court ruling, the US Securities and Exchange Commission (SEC) had ordered Kraken to suspend its staking services offering.
The SEC claimed that Kraken’s staking services contravened with the US federal and securities law. Also, the SEC imposed a $30 million fine on Kraken for violation of law.
Based on the multiple charges battling the US-based crypto exchange, Kraken has agreed to comply with the court ruling.
According to the announcement, Kraken plans to share customers’ information with the IRS. The announcement revealed that Kraken’s report would include customers’ transaction history, user names, contact information, and tax identity, among other details.
In an email, Kraken shared the proposed procedure for sharing customer information with the IRS.The crypto exchange also informed the affected customers that their past transaction details would be shared with the revenue regulators. The email revealed that Kraken will share the information with the IRS next month.
Court Orders Kraken to Share Customers Data with IRS
An announcement conveyed by a Kraken spokesperson revealed that the crypto exchange had been resisting sharing customers’ data with the IRS. He confessed the crypto exchange had requested the court to change its decision on data sharing.
The spokesperson admitted sharing customers’ sensitive information, such as IP addresses, banking details, net worth, and employment data, with revenue regulators might lead to data privacy concerns. He confessed that Kraken would strive to safeguard the privacy of its customers.
In September, the IRS team informed the crypto investor of the change in the tax regime. The regulators stated that investors might be required to disclose their crypto and nonfungible tokens (NFT) earnings on their tax reports.
The IRS regulatory approach aimed at filling the gaps in the US tax system. Citing the uncertainty in the crypto sector, the IRS has collaborated with other regulators to ensure American investors meet their tax obligations.
In 2022, the IRS requested the court to allow the regulators to assess transaction details of the California-based brokerage company sFOX.
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