What will IRS targeting of Coinbase mean for U.S. online gamblers?

Discussion in 'General Bitcoin Gambling Discussion' started by Humble Servant, Nov 18, 2016.

  1. Humble Servant

    Humble Servant Active Member Staff Member

    Coinbase have always differentiated themselves from other bitcoin start-ups as being the company that plays by the book. They are a US-based wallet and exchange that boast about being fully compliant with all relevant rules and regulations. Anyone who has tried to buy or sell bitcoin on Coinbase recently will be aware of their exhaustive KYC/AML procedures and it is rumoured that at least half of their staff are involved in this endeavour. This air of legitimacy has enabled them to raise over $100 million in VC funding, as many investors feel they are the most likely candidate for a bidding war between the major banks should the popularity of bitcoin continue to rise.

    Unfortunately, getting into bed with the US government is a double-edged sword. According to ZeroHedge, the Internal Revenue Service (IRS) is now demanding that Coinbase provide it with the identities of all customers who have made a transaction over the past 3 years. Court filings reveal that the IRS are trying to ascertain how much tax Coinbase users owe to the tax collection service. Considering Coinbase have close to 4 million customers, this could prove to be a huge treasure trove of information for the IRS as they seek to uncover unreported crypto-currency profits between 2013 and 2015.

    Coinbase have always been a mixed blessing when it comes to online gambling. Because the software is easy to use, gamblers who are new to crypto have typically flocked there in their droves. Their exhaustive KYC/AML procedures have also enabled them to work closely with U.S. banks to allow seamless money transfers between Coinbase accounts and regular bank accounts. However, since gambling is a legal grey area in the United States, Coinbase regularly close player accounts if they suspect that they are engaged in online betting activities. Online gamblers who want to cash out their bitcoin have typically had to use middle-man wallets like Mycelium and BreadWallet to hide their activities.

    The big question is will this IRS investigation be the final nail in the coffin for Coinbase when it comes to online gambling? Will U.S. punters be comfortable knowing that the IRS is potentially tracking all of their bitcoin activities?

    Last edited: Nov 18, 2016
  2. EvilK

    EvilK Member

    This is surely only a big deal if you are a high-roller who is winning six figure amounts. If you convert a couple of hundred dollars per year into bitcoin to bet on the NFL or NBA then I can't see how this investigation is going to cause you any problems. I'm sure PayPal, Visa, Mastercard Skrill, Neteller etc. are all monitored by the IRS in a similar fashion.
  3. 2damoon

    2damoon Member

    It will mean that they sports bettors in the U.S. will use wallets that are not monitored by the government.
  4. Humble Servant

    Humble Servant Active Member Staff Member

    Coinbase recently got some unexpected support from a couple of U.S Senators who agreed that the IRS were overstepping the mark by requesting the records of all Coinbase customers in the United States.
  5. Humble Servant

    Humble Servant Active Member Staff Member

    The IRS is no longer looking for records of EVERY US Coinbase customer. Thankfully they are now only looking for info on big traders who have made individual buy, sell, send or receive transactions worth more than $20,000.

    The average online gamblers in the United States probably only exchanges a couple of hundreds dollars at a time at Coinbase so they are safe from investigation for now.
  6. Humble Servant

    Humble Servant Active Member Staff Member

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