Digital Currency Exchange Customers Targeted In IRS Information-Gathering Sweep

Coinbase, one of the largest digital currency exchange companies in the world, will likely be asked to provide the Internal Revenue Service (IRS) with transactional data and other information on all U.S. customers who used its services over a three-year period. Using what is known as a "John Doe" summons, the IRS has formally requested permission from a federal court to seek extensive information on all "United States persons who, at any time during the period January 1, 2013, through December 31, 2015, conducted transactions in a convertible virtual currency" through Coinbase.

If the summons is served as approved by a federal court this week, Coinbase will face the substantial burden of producing a long list of customer-related and other records. However, this data production will only be the first step in a process that may ultimately impact accountholders whose information is turned over to the IRS. The accountholders (corporate and individual) may become subject