The IRS’ efforts to seize and confiscate stores of cryptocurrency have skyrocketed recently. According to a recent report from CNBC, the U.S. government has seized a whopping $1.2 billion worth of cryptocurrency in fiscal year 2021 alone.
This is an enormous increase from the mere $137 million of cryptocurrency which the U.S. government seized in fiscal year 2020.
The Government Attacks Cryptocurrency?
When the IRS or other government agencies conduct raids and seize the assets of those whom they come after, it is common for those agencies to then auction off the assets seized in an effort to raise additional revenue.
As the director of the IRS’ cybercrime unit, Jarod Koopman, explains, “It could be 10 boats, 12 cars, and then one of the lots of X number of Bitcoin being auctioned.”
The hauls in these recent cryptocurrency raids come primarily from tax avoidance cases. People have increasingly begun to park their money in crypto assets as a way of avoiding having to pay taxes.
The totals for the amounts seized, however, do not necessarily indicate that the U.S. government has become better at confiscating cryptocurrency. Between fiscal year 2020 and fiscal year 2021, the dollar prices of many cryptocurrencies — particularly Bitcoin — have sharply risen. The large year-over-year dollar amount increase in seizures may be largely explained by that fact.
Still, there is no question that the U.S. government has begun taking a keener interest in cryptocurrencies.
Many cryptocurrency boosters have touted them as a way to reclaim financial privacy and gain the ability to carry out financial transactions without the interference of the state. “Interference” can mean anything from formal regulation and taxation to the inflation that government money printing creates for dollar users.
But since these cryptocurrency seizures have frequently been the result of tax compliance cases, it’s clear that the government feels threatened by some of the potential of many cryptocurrencies.