As the Internal Revenue Service (IRS) pushes forward with its proposal to increase cryptocurrency surveillance, a past report might offer a clue for how this information may be used in practice. In short, with the IRS set to keep tabs on Americans’ cryptocurrency usage through an expected 8 billion new returns, it seems the Department of Justice (DOJ) may soon have the tools it wants to start confiscating cryptocurrency at an unprecedented rate.
The issue stems from a 2022 report written by the DOJ in response to Executive Order 14067. For those who might not remember, Executive Order 14067 was President Biden’s first major cryptocurrency initiative. Although many people initially feared an impending crackdown was coming, the executive order largely delayed making sweeping changes by first calling on agencies to issue reports to inform future policies around cryptocurrency and related issues.
The report, written by the DOJ, covered a vast range of topics. Largely falling into four categories, the recommendations spanned ways to aid prosecutions, ways to improve investigations, ways to expand penalties for cryptocurrency-related crimes, and ways to increase the resources available for government employees.
What’s most interesting for the present conversation, however, is where the DOJ argued for increasing its ability to seize cryptocurrency.
For example, the report states that “it is critical that the United States have the authority to forfeit the proceeds of cryptocurrency fraud and manipulation as a means of deterring such activity and divesting violators of their ill-gotten gains.” Therefore, the DOJ recommends expanding its authority over criminal, civil, and administrative forfeiture.
The DOJ has claimed these updates are necessary because the department’s experience with cryptocurrency-related cases has “revealed limits on the forfeiture tools used to deprive wrongdoers of ill-gotten gains and, in certain cases, restore funds to victims.”
Yet this argument is difficult to understand considering how much and how often the government has been able to seize cryptocurrency over the years. In fact, the report itself mentions such cases. Between 2014 and 2022, the FBI seized around $427 million in cryptocurrency. The IRS seized another $3.8 billion between 2018-21.
With more than $4 billion on hand, the DOJ’s argument that the U.S. government is struggling to seize cryptocurrency is just not as apparent as the report’s recommendations make it out to be.
Still, the IRS’s broker proposal puts the DOJ’s report into a new light given the vast surveillance that the proposal would likely create — vast surveillance that could be used to start confiscating cryptocurrency at an even greater rate.
The problem is what’s referred to as administrative forfeiture. As Nick Sibilla explained in Forbes when the report first came out, “Under ‘administrative’ or ‘nonjudicial’ forfeiture, the seizing agency — not a judge — decides whether a property should be forfeited.” In other words, agencies do not need to prove to a judge that a crime was committed in order to seize the property.
The DOJ commended this process for promoting an “efficient allocation of government resources” while discouraging “undue burdens on the federal judicial system.” In fact, this process seems to be the DOJ’s preferred practice given that administrative forfeitures made up 78 percent of its forfeitures between 2000 and 2019.
Department of Justice forfeitures by category, 2009-19. Source: Institute for Justice
With the IRS collecting vast amounts of new information on Americans’ cryptocurrency use, it’s possible that the DOJ may “suddenly” find vast new arenas for cryptocurrency confiscation. And again, it’s important to stress that these confiscations don’t have to start with an actual crime being committed—just the mere suspicion.
Given how often misunderstandings surrounding cryptocurrency have fueled headlines, it’s not difficult to imagine how such suspicions could emerge. For example, it was less than a month ago that more than 100 members of Congress cited a flawed report to call for a crackdown on cryptocurrency.
Considering the IRS proposal in this light helps to showcase one of the major risks of mass data collection. Whether it’s the DOJ seeking to expand its confiscation activities, the IRS looking to increase audits, or a hacker seeking out an exploit, massive government databases create tempting targets for both internal and external abuse.
If the IRS pushes forward with its proposal, cryptocurrency users should keep a careful eye on how that data is ultimately used by the government at large.
Nicholas Anthony is a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives. He is the author of The Infrastructure Investment and Jobs Act’s Attack on Crypto: Questioning the Rationale for the Cryptocurrency Provisions and The Right to Financial Privacy: Crafting a Better Framework for Financial Privacy in the Digital Age.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Remarkable – and relatively speaking a blessing – that the wake-up call for Britain to take defence seriously again did not come in the form of a military attack on UK soil, but instead was triggered by the verbal assault of Ukraine’s wartime leader by a sitting US president.
The lack of any physical destruction on British streets, though, should fool no one in government or wider society that the framework of security that has protected the country and its allies since the end of the Second World War is not at best cracked and at worst shattered.
Instead, check out one of the latest posts by Elon Musk, Donald Trump’s “disrupter-in-chief”.
He used his social media site X to say “I agree” with a call for the United States to leave NATO – a transatlantic alliance, and the bedrock of European security, that the new administration had until now continued to back at least in public.
It is yet another example of escalating hostility from the new Trump White House – which has sided with Russia against Ukraine, lashed out at its European partners over their values, and even suggested absorbing Canada as the 51st American state.
The alarming mood-change by a nation that is meant to be a friend surely demands an equally dramatic shift in approach by NATO’s 30 European allies and their Canadian partner.
Rather than stating the obvious – that American support can no longer be taken for granted – they should instead be actively adapting to a world in which it fundamentally no longer exists.
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1:42
When Starmer met Zelenskyy: What happened?
Make no mistake, this would be a daunting and humbling prospect – perhaps too awful even to contemplate, in particular for the UK, which has tied itself militarily so closely to the US for pretty much everything from intelligence sharing and technology to nuclear weapons.
Britain is not alone. All European militaries, as well as Canada, to a greater or lesser extent rely heavily on their more powerful American partners.
Breaking that dependency would require a rapid expansion in military capabilities and capacity across the continent, as well as a huge effort to build up the defence industrial base required to produce weapons at scale and exploit emerging technologies.
Sir Keir Starmer – who is hosting a Ukraine summit of allies on Sunday – has rightly adopted the UK’s natural position of leadership in Europe in the wake of Donald Trump’s extraordinary hostility towards Volodymyr Zelenskyy. He gave the embattled Ukrainian president a warm embrace on Saturday when the two met at Downing Street.
Britain is one of Europe’s two nuclear-armed states, a powerful voice within NATO, and a permanent member of the United Nations Security Council.
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2:46
All the times Zelenskyy thanked the US
But talking tough on defence and the need to support Ukraine as the US steps back is no longer enough in a world where hard power is the only real currency once again.
A pledge by the prime minister to increase defence spending to 2.5% of national income by 2027 and to 3% in the next parliament is of course a step in the right direction.
Yet unless it is accompanied by much greater speed and urgency coupled with a genuinely generational shift in the entire country’s approach to national security then it will go down in history as the headline-grabbing but otherwise empty gesture of a government that has forgotten what it means to be ready to fight wars.
She wrote that she supported the plan to lift the defence budget but said even 3% “may only be the start, and it will be impossible to raise the substantial resources needed just through tactical cuts to public spending”.
She added: “These are unprecedented times, when strategic decisions for the sake of our country’s security cannot be ducked.”
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1:31
Ukrainians react to White House meeting
Ms Dodds is right.
It is no longer good enough to treat defence, deterrence and wider national resilience as a niche subject that is delivered by an increasingly small, professional military.
Rather, it should once again be at the heart of the thinking of all government departments – from the Treasury and business to health and education – led by the prime minister, his national security adviser and the cabinet secretary.
This is not something new. It was normal during the Cold War years when, after two world wars, the whole country was acutely aware of the need to maintain costly but credible armed forces and a population that was ready to play its part in a crisis.
Sir Keir Starmer has suggested a coalition of European allies could step up and defend a potential deal for Ukraine to “guarantee the peace”.
The prime minister indicated some EU nations could be prepared to increase defence spending to protect any peace deal that is agreed between Ukraine and Russia.
But speaking at summit of EU leaders in central London, Sir Keir acknowledged that no such coalition had yet been formed and that “not every nation will feel able to contribute”.
Instead, he said “those willing” – though he did not state which countries this included – would “intensify planning now with real urgency”.
In a sign this could mean troops from member states being sent to Ukraine, he added: “The UK is prepared to back this with boots on the ground and planes in the air, together with others. Europe must do the heavy lifting.”
The UK can still trust the US with Ukraine’s future despite the bad-tempered clash at the White House between Donald Trump and Volodymyr Zelenskyy, a minister has said.
There are concerns among Western leaders that the exchange – which resulted in Mr Zelenskyy leaving empty-handed and without having signed an important minerals deal to continue US support – could result in the White House withdrawing aid for Ukraine’s war effort.
But Mr Thomas-Symonds, who is also minister for the constitution and European Union relations, said he believed we could “still trust the Americans”.
And he said that in the event the US did pull financial support for Ukraine, the UK would “continue to be an honest broker” and “bring the different parties together”.
Echoing the US’s president’s language, he added: “We will also continue to make the case that peace is made from a position of strength, not a position of weakness.
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“So, it remains critical to put Ukraine in the strongest possible position.”
On whether Britain could still trust the Americans, Mr Thomas-Symonds replied: “Yes, I do believe we can trust the Americans.
“We do have an ally in the United States that we can trust,” he continued. “There’s no ambiguity about that.”
Present will be the leaders of Italy, France, Germany, the Netherlands, Poland, Spain, Finland, Denmark, Norway, the Czech Republic and Romania. Canada and Turkey will also attend.
The PM’s role as a peacemaker takes on greater significance following the breakdown in relations between Mr Trump and Mr Zelenskyy that unfolded in front of the world’s TV cameras.
In the aftermath of the fallout, Sir Keir phoned Mr Zelenskyy and invited him to Downing Street on Saturday ahead of today’s summit in a show of support for Ukraine.
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3:10
Blow-by-blow: Inside Zelenskyy and Trump’s clash
He also phoned the US president, saying his “driving purpose” was to “bridge this and get us back to the central focus”.
Turning to the scenes at the Oval Office on Friday, Mr Thomas-Symonds admitted he had “never seen anything quite like that”.
“Obviously that is not how it should have happened.”
His sentiments were echoed by shadow foreign secretary Priti Patel, who said she was “absolutely aghast” at “the whole spectacle” which saw Mr Trump accuse the Ukrainian president of “disrespecting” the United States and “gambling with World War Three”.
In a sign of how badly the meeting went, the minerals deal the pair had expected to sign – which would have established a new fund for the US to invest in Ukraine’s minerals, rare earth materials and other valuable natural resources – was put on ice.
Mr Trump viewed the minerals transaction as a fair way to recover the billions of dollars that the US has given Kyiv in its war effort and as necessary to guarantee further US military support for Ukraine.
Ms Patel said the scenes at the White House were “unedifying and undignified”.
“When we look at President Zelenskyy…I think he’s a hero,” she went on.
“He’s an absolute hero in the way in which he stood up to authoritarianism. He’s fighting for the sovereignty of his country.
“He also know when the going gets tough. You keep your disagreements not in front of cameras, but you keep them private. So, you know, we are where we are.”