Uncle Sam has Bitcoin traders on the radar these days, as the cryptocurrency passes $4,300 in late August trading.
With more assets pouring into digital currencies, the federal government, via the Internal Revenue Service, is looking to get its fair share from Bitcoin — a cut that the IRS doesn’t believe it’s been getting until now.
That could change, and fast, as the IRS is using a software program that monitors Bitcoin-based digital addresses, in a campaign to identify potential tax evaders.
Using a customized software program from Chainalysis, a blockchain data analysis firm in New York City, the IRS expects to extract more intelligence — and potentially more fraud — from virtual currency movements through the blockchain and centralized currency exchanges. Chainalysis says it’s able to track approximately 50% of all Bitcoin activity, and 4 million additional Bitcoin addresses, more than enough to get an accurate gauge on who’s hiding cash from the IRS.