The IRS has seized $1.2 billion in crypto in 2021, according to the director of its cybercrime unit. That figure is exponentially higher than what’s been seized in previous years.
Reports from CNBC show that the U.S. government is sitting on a huge amount of bitcoins. The outlet reported that the government has been increasing its scrutiny of cryptocurrencies and consequently confiscating more of them. Earlier this year, the IRS announced that it had seized $3.5 billion in the fiscal year of 2021.
The U.S. government has reportedly seized 170,000% more crypto this year than it did in 2019. Speaking to CNBC, Jarod Koopman, director of the Internal Revenue Service’s cybercrime unit, said,
“In fiscal year 2019, we had about $700,000 worth of crypto seizures. In 2020, it was up to $137 million. And so far in 2021, we’re at $1.2 billion.”
The government has auctioned off bitcoins in the past, often at heavily undervalued prices. Its next auction will see $56 million in crypto-related to the BitConnect case sold. However, the funds on this occasion will be used to reimburse victims of the incident.
The jump in crypto-related confiscations is enormous but somewhat unsurprising in retrospect. The crypto market has become more popular in recent years, with the price of assets increasing alongside it. That might explain why lawbreakers are using crypto more.
Furthermore, the U.S. government has only recently begun to investigate the crypto market for any weak spots. They are very keen on preventing the misuse of the asset class to finance criminal activities, and that is one of their top priorities. To that end, the IRS and other government agencies are all working on various initiatives.
US government not slowing on crypto regulation
Among those initiatives are taxation, investor protection, and stablecoin regulation. The IRS, in particular, has been working hard to introduce crypto-related clarifications to the 1040 tax form. It is also working with to ensure that traders report their numbers correctly.
Meanwhile, the SEC is reviewing a broad framework that would facilitate investor protection. They have repeatedly made this point and are currently scrutinizing the many ETF applications. There has been some progress with the latter, though no spot ETFs have yet been greenlit.
Stablecoins are proving to be a major pain point for lawmakers, and will likely see regulation in the coming months. Senator Elizabeth Warren spent a good deal of time asking questions about stablecoins and in a recent senate hearing.
