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A new US law that requires citizens to report crypto payments over $10,000 is set to go into effect in January, following the dismissal of a legal challenge in court last week.
Crypto Regulation!
The legal challenge began last year when crypto advocacy group Coin Center and several other plaintiffs filed a lawsuit against the US Department of the Treasury and the Internal Revenue Service (IRS) regarding a change made to Section 6050I of the tax code in 2021. The change will require citizens who receive $10,000 or more in crypto payments to report the transaction and provide the sender’s personally identifiable information (PII) to the government.
In the Coin Center case, the company argued that the new requirement would necessitate the disclosure of “unauthorized details” and expose other transactions the individual may have made due to the nature of public ledgers for cryptocurrencies. In their statement, the company said:
The reports required by the reporting authority will reveal a detailed picture of an individual’s personal activities, including far beyond the scope of the authority, including intimate and significant activities. The reports will provide an unprecedented level of detail about transactions in an area where users take a number of steps to protect the privacy of their transactions.
US Objection!
However, a US District Judge in Kentucky dismissed the case last week, calling it “premature” and stating in their remarks:
If the Court were to accept the Plaintiffs’ claim that Congress exceeded its enumerated powers, the Plaintiffs would be unlikely to face significant hardships as a result. Amended §6050I will not require the Plaintiffs to disclose information until 2024, yet the Plaintiffs have not presented any plausible claim that the Court could conclude that the disclosed information would be used by the Government to monitor its other unrelated transactions. This factor also weighs against judicial review and maturity determination.
Coin Center’s executive director Jerry Brito stated on Twitter that they plan to “promptly” appeal to the Sixth Circuit. Jake Chervinsky, the head of policy at the Blockchain Association, emphasized that he is not very concerned about the judge being removed from office, saying:
This is a minor setback, but it’s just a procedural setback. The Court isn’t saying Coin Center is wrong, just that they filed the lawsuit too early.
