A legal challenge over crypto reporting could strike down decades-old anti-money laundering laws - The Verge
Coin Center, a cryptocurrency policy advocacy group, is suing the US government over what it calls "unconstitutional financial surveillance" regarding an amendment to the tax code that requires all crypto payments over $10K to be self-reported to the IRS.
Ever since the Silk Road, Bitcoin’s power to fuel anonymous transactions (and, more specifically, money laundering) has been a prime concern for lawmakers and law enforcement agencies. A new provision passed as part of the infrastructure package tried to tackle that issue, but it’s running into stiff opposition from cryptocurrency groups — and a legal challenge that could have huge implications for financial transparency across the country.
In November 2021, when President Biden’s trillion-dollar Infrastructure Investment and Jobs Act was signed into law, a controversial cryptocurrency-related provision was passed along with the major legislation on roads, bridges, and other infrastructure.
The bipartisan infrastructure bill included an amendment to the tax code that required any business or individual receiving a cryptocurrency transaction of more than $10,000 to report it to the IRS, using a specific form that includes the sender’s name, date of birth, and taxpayer identification number. This matches the cash reporting requirements already in Title 26 Section 6050I, and failure to comply can result in a fine of up to $250,000 for an individual and up to five years in prison.
Though the tax code changes have already been passed, the reporting requirement won’t start until the 2024 tax year begins — unless a challenge to the law prevents it from coming into effect.
Last week, Coin Center filed a legal challenge in the United States District Court for the Eastern District of Kentucky, naming as defendants Janet Yellen as a representative of the Treasury Department, IRS commissioner Charles Rettig, and US attorney general Merrick Garland on behalf of the government as a whole.