One of the major issues that have been plaguing cryptocurrency traders and holders is the ever-growing number of government seizures. From Japan to the United States, there have been many instances where law enforcement agencies have seized cryptocurrency holdings – whether it be from individuals or businesses. One agency in particular that has seen a significant amount of success in these endeavors is IRS agents who have made billions by seizing crypto assets. In this post, we will outline 5 potential reasons why IRS sees billions in crypto seizures.
Cracking Down on Illegal Transactions and Money Laundering
One of the main reasons why the IRS is cracking down on what it sees as illegal transactions and money laundering is because most cryptocurrencies were designed to bypass third-party influence, thus making them ideal for criminal activities such as tax evasion and money laundering. When we look at Bitcoin in particular – the most popular cryptocurrency today – it was created in 2008 in order to eliminate the need for any bank or government involvement during transactions.
Lack of Paper Trails
Another motivator behind IRS seizing cryptocurrencies is the absence of a paper trail. Unlike when dealing with fiat currencies (dollars, euros, pounds, etc.), there is no physical proof of your ownership of the cryptocurrency. This means that when you sell or trade your digital currency, there is no seller or buyer information to prove that the transaction actually happened. Essentially, this provides an opportunity for anyone to sell their coins without it being associated with them.
Lack of Transparency
There’s also a lack of transparency involved in Bitcoin transactions. Since Bitcoin was designed for anonymity, it’s virtually impossible to determine the identity of the sender and receiver just by looking at wallets. This makes it extremely tough to prove that cryptocurrency was received illegally or involved in criminal activity.
Fear of Losing Out
Another important aspect is that Bitcoin has become incredibly popular recently, which means there is more and more competition among traders and investors to sell their Bitcoins. This has led some people to avoid reporting their cryptocurrency activity, while others have even resorted to illegal measures in order to avoid losing out on huge profits.
Fear of Doing the Wrong Thing
Finally, another reason why IRS is seeing so much success with seizing cryptocurrencies is that most people don’t know whether they should report their cryptocurrency transactions to the IRS or not. This is one of the main reasons why we’ve seen a significant increase in tax evasion and money laundering recently.
The Future of Cryptocurrency
Even with all these obstacles, there’s no doubt that cryptocurrencies like Bitcoin and Ripple will continue to grow and even replace fiat currencies in the near future. Many European countries such as Sweden and Russia have started embracing digital currency payments, which shows that many governments are willing to explore new technologies like cryptocurrency.