The Internal Revenue Service (IRS) has significantly narrowed its data request on Coinbase users after facing strong opposition. Instead of demanding information on all Coinbase customers, the agency now seeks details only on users who transacted at least $20,000 in a single transaction type (buy, sell, send, or receive) within any one year during 2013–2015, according to a July 6 court filing.
Reduced Scope of Information Request
The original “John Doe” summons filed in March 2017 sought a broad range of data, including vault details, account settings, and transaction records for all Coinbase users. This was met with a motion to intervene from Coinbase and anonymous users, who argued the request was overbroad and could expose sensitive data to hackers. The IRS conceded, now requiring only names, addresses, driver’s license and passport information, wallet addresses, and public keys for what it calls “covered users.”
DOJ attorney Amy Matchison stated in court that the narrowed request was a direct response to objections. “The United States seeks information for users with at least $20,000 in any one transaction type,” the court document reads. The change aims to balance tax enforcement with user privacy concerns.
IRS Retains Authority for Individual Summonses
Despite the concession, the IRS reserves the right to issue individual summonses for any Coinbase user, regardless of transaction amount. The filing notes, “The United States reserves the right for the Internal Revenue Service to issue Summonses in individual examinations of Coinbase users for the information that it no longer seeks in this proceeding.” This means users with smaller transactions could still face scrutiny if the IRS suspects non-compliance.
The move is seen as a tactical compromise in the IRS’s broader effort to crack down on cryptocurrency tax evasion. While some cheer the privacy win, experts warn that the agency may use this case as a foundation to expand data collection in the future. Coinbase has not commented beyond its earlier opposition, but the case highlights ongoing tensions between regulators and the crypto community.