Coinbase will now help the IRS trace cryptocurrency transactions

Bob
Published by:
Posted on 07/17/2020

The US taxman has reached out to the crypto exchange to use its tracing software

Coinbase announced a while ago its intention to sell its proprietary blockchain analytics software to government agencies, including the Internal Revenue Service (IRS) and the Drug Enforcement Administration (DEA). One of those goals has been met, as the company announced that it has finally entered a deal for the IRS to license Coinbase Analytics tracing software. The agreement was announced on Wednesday and it is a two-year contract in which the federal agency will pay $237,405 to use the software, according to public records.

This is a negotiation that has been going on since April, and it was finally completed this week. In April, the IRS said that what Coinbase was offering had “capabilities that are not currently found in other tools on the market.” This software has other rivals like Chainalysis and Elliptic, and both of those companies have worked with the IRS in the past. Coinbase software is filled with data available to the public and found online, and it does not include any personally-identifiable information. This tool is used internally by the cryptocurrency exchange for compliance and global investigations.

Coinbase CEO Brian Armstrong didn’t want to make a big deal out of the recent ties with government agencies; he, instead, tried somehow to downplay the significance of the service. Responding to a community pushback on July 11, he said on Twitter that blockchains are traceable without the need of his company doing the job.

This is the second federal agency that is buying the service from Coinbase. On July 7, it was revealed that the crypto exchange already had a contract signed – worth nearly $50,000 – with the US Secret Service since May.

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