Court approves IRS application, Coinbase user information lost

A federal judge yesterday ruled that the U.S. Internal Revenue Service (IRS) has the right to access user information of Bitcoin and Ethereum exchange Coinbase.

The ruling came into effect on November 30, with Judge Jacqueline Scott Corley deciding to approve the IRS's petition, allowing it to investigate any possible tax evasion in the United States.

Coinbase said it is aware of the judgment and will make a formal statement soon.

The US government is celebrating the victory. IRS Commissioner John Koskinen said:

Like any other property, virtual currency transactions are taxable. The existence of 'John Doe' summonses (which are generally used in the IRS system when multiple persons are summoned or no specific person is specified) is to ensure that citizens engaged in the emerging economy also comply with tax laws and fulfill their responsibilities.

The Coinbase user information that the IRS requested to see was from December 31, 2013 to December 31, 2015. When Coinbase first received the subpoena, it said it would do its best to protect user privacy.

Since 2015, the IRS has considered Bitcoin and other digital currencies as taxable assets. Recently, the IRS Inspector General pointed out the gaps in the taxation of digital currencies by the department. The American Institute of Certified Public Accountants (AICPA) has also raised similar questions.

The specific contents of the judgment are as follows: