Cryptocurrencies

IRS Enlists Coinbase in Latest Crypto Tracing Deal

Coinbase CEO Brian Armstrong has tried to downplay the significance of his exchange's government ties. (CoinDesk archives)

The Internal Revenue Service has become the second U.S. government agency to license Coinbase’s cryptocurrency tracing software, Coinbase Analytics.

  • On Wednesday, the tax agency agreed to pay the cryptocurrency exchange up to $237,405 over the next two years for use of its newcomer blockchain analytics program, as per publicly available records found by the Block.
  • The pair have been working toward a deal since at least April. At the time the IRS said Coinbase’s offering had “capabilities that are not currently found in other tools on the market.” Coinbase’s blockchain tracing rivals Chainalysis and Elliptic have both worked with the IRS in the past. 
  • Coinbase CEO Brian Armstrong has attempted to downplay the significance of his firm’s government ties. On July 11, in response to community pushback, he argued on Twitter that blockchains are traceable whether his firm does the job or not. 
  • CoinDesk revealed on July 7 that Coinbase closed its first government contract (worth nearly $50,000) with the U.S. Secret Service in May.

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