Bitcoin loses 20% amid reports of U.S. courts ordering Coinbase to disclose 14000 transactions, which are above $20000, to IRS.
It looks like the euphoria circulating the unstoppable surge in Bitcoin prices has finally ended! In just a matter of 24 hours, Bitcoin prices have plunged by 20% and extreme wild fluctuations and volatility are seen in Bitcoin prices again. According to the data by CoinMarketCap, Bitcoin price hit its historic all-time high of $11,517.40 on November 29 triggering a huge selling pressure. Just 24 hours later, today on November 30, 2017, it has hit a low of $9308.28.
Massive selling pressure made major online exchanges like Coinbase and Gemini face a serious challenge of completing the transactions because of several interruptions and outages. One of the major reasons for this massive sell-off is believed to be the U.S. Court’s order to Coinbase exchange to submit 14,000 customer data to the IRS. In what is said to be a year-long battle of Coinbase with the U.S. Tax Authorities, the court’s order is perceived as a victory for Coinbase.
The court order says that Coinbase is to report to IRS only on those transactions, which are above $20,000, or 3% of total transactions as requested by the U.S. Tax Authorities, which amounts to14,000 transactions. Director of Communications at Coinbase, David Farmer wrote in his Medium Blog:
“Although we are disappointed not to be able to entirely defeat the summons, we are proud to fight for our customers and in the result we were able to achieve as a small company against a large government agency.”
Farmer further reported that around 480,000 customer’s records have been preserved and protected from disclosure. Hinting the fact that IRS’s own demands are unlawful in a way, Farmer wrote:
“The government’s own lawyers noted at the hearing that the IRS is not accustomed to having to fight for records in this context, and most companies just turn records over without going to court.”
However, the fact still remains that Coinbase continues to face severe operational and technical issues while dealing with a huge customer traffic on its portal. After seeing a massive traffic and huge selling pressure, Coinbase had to shut down its operations for 1-2 hours for maintenance issues.
Coinbase is performing maintenance to improve performance under high traffic given the large volumes we saw today. We expect buys and sells to be offline for 1-2 hours. Customers can still access their accounts, deposit and withdraw.
— Coinbase (@coinbase) November 30, 2017
However, while confirming that Coinbase will extend its full support to IRS in the process (and indirectly taking a jibe at them), Coinbase co-founder and CEO Brian Armstrong tweeted:
Looking forward to working with the IRS on responsible tax reporting for our customers (e.g. 1099s or the like) which makes it easy for everyone to pay their taxes. Easier to pick up the phone and work together. https://t.co/khj0F3HMCW
— Brian Armstrong (@brian_armstrong) November 30, 2017
One thing which remains to be true about cryptocurrencies is that with its increasing popularity, tax authorities from a number of countries are most likely to have a close watch on the activities of exchanges and its customers in general. Moreover, the tremendous growth of Bitcoin has resulted into a huge influx of customers getting registered on exchanges and more financial institutions announcing their enter the Bitcoin space with their investment products.
In such a way, meeting this rapidly growing customer base while still maintaining all the records and keeping data safe – is surely a huge challenge for all the exchanges, which have no choice but cope with it.
After a sudden dip in its price, Bitcoin has now recovered partially currently trading $9885.69 as per CoinMarketCap.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
