Current Regulatory Trends and Enforcement in Cryptocurrency

• IRS seeks $32 million for crypto tax enforcement. It seeks $32 million ($3 million on IT specialist compensation, $6 million on hardware and software and $23 million on contractual services) to enhance cryptocurrency-related enforcement efforts. The funding will enable the IRS’s Criminal Investigation Division (CID) to: expand the use of specialized contractor support service provided by a group of cyber/crypto experts; build an internal dashboard for cryptocurrency/blockchain analytics (STRIKES); establish a One-IRS approach to cryptocurrency non-compliance around both tax and non-tax case development; and seek private sector expertise in applied analytics, cybercrime, forensic accounting/discovery support, investigative support, and related consulting services.
• The FTC announced a spike in cryptocurrency investment scams. It describes a loss of more than $80 million by consumers to cryptocurrency investment scams since October 2020, and the FTC claims the losses have increased more than ten-fold each year.
• The SEC delays review of the first Bitcoin ETF. Under review is the trading of shares of the WisdomTree Bitcoin Trust, an exchange-traded fund (ETF). The SEC is set to issue its decision on July 14.
• The Congressional Blockchain Caucus seeks IRS guidance on cryptocurrency donations. It wrote a letter to the IRS seeking clarification on ambiguities regarding appraisals for charitable donations of cryptocurrency. Namely, the conflict between the all-inclusive requirement to provide evidence of fair market value at the time of receipt versus the requirement for determining fair market value of donated virtual currency in excess of $5,000 through a written qualified appraisal by a qualified appraiser. The letter suggests eliminating the appraisal requirement to incentivize charitable giving.
• California man was sentenced to 24 months for operating an unlicensed Bitcoin ATM network. He was charged with operating an unlicensed money transmitting business and money laundering. He was forced to forfeit 17 Bitcoin ATMs, $22,820 in cash, 18.4 Bitcoin and 222.5 Ethereum.
• The DOJ seizes $2.3 million in cryptocurrency paid in Colonial Pipeline cyberattack. The DOJ seized nearly 64 Bitcoin valued at approximately $2.3 million which represented the proceeds of the ransom payment made to DarkSide, which targeted Colonial Pipeline with a ransomware attack. The perpetrator’s private keys were recovered under a search and seizure warrant.