Kraken Bucks the Trend Regarding IRS Request For Users’ Crypto Details

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Kraken Bucks the Trend Regarding IRS Request For Users' Crypto Details

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Cryptocurrency exchange Kraken, the world’s largest bitcoin exchange in euro volume and liquidity, has said that it does not hand its client details to the Internal Revenue Service.

It has become common for some cryptocurrency exchanges to share their clients’ details with the IRS for tax purposes; a practice that continues to annoy many investors in their quest for true decentralization and increased anonymity.

The IRS requested details including transaction history of 1300 users last year from exchange giant Coinbase, an accusation which was also aimed at Kraken in terms of their readiness to pass on client details for tax purposes. The accusation has since been denied by the California-based exchange, assuring their users on Reddit that they don’t alert the IRS of clients’ crypto holdings, stating:

“We cannot provide advice in relation to inquiry on taxes. (It is also probably not advisable to take tax advice from any Reddit post or comment – and certainly not from twitter either, but you may wish to consult your own CPA, tax advisor, or tax attorney individually and privately.)”

Kraken’s response, suggesting that taking advice on Reddit was possibly a poor source of information for tax purposes, may have been aimed at an earlier post via social media by “Crypto Tax Girl” who commented on Twitter:

“For 2018, Coinbase, Kraken, and Gemini will be reporting to the IRS, so you may receive a 1099-K. A 1099-K doesn’t have any specifics about your transactions (like a 1099-B does), but it does signal to the IRS that you hold crypto.”

Kraken’s support team confirmed that this was, in fact, untrue and that they do not send end of tax year statements to the IRS and leave any tax dealings totally in the hands of their clients

The support team further clarified that they do not send end-of-the-year statements to their clients and that the clients of the platform are responsible for their own reporting. This had Reddit abuzz with attacks on the US government. One Reddit writer expressed his irritation at the likes of Coinbase handing over user details to the IRS

“There was no way the US would allow these exchanges to operate and let their customers not pay US taxes. Hell, the US forced Swiss banks to give up tax info.”

Another writer saw Kraken’s stance as a wakeup call arguing:

“Good, the faster we have exchanges getting onboard with centralized entities the faster and harder people will work to make Decentralized Exchanges a thing, we need them sooner or later and if this does not light a fire under people’s asses then I do not know what will.”

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