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United States IRS Requests all data for coinbase users

United States IRS Requests all data for coinbase users

The court system in the United States has recently approved a release of all records pertaining to U.S customers, including transaction data between 2013 and 2015 which are held by coinbase to the IRS (Inland Revenue Service, the tax authority in the United States). This has implications for those who have been trying to avoid taxes but also big privacy ramifications. Coinbase plan to appeal the request in the appeal courts.

Coinbase, sometimes nicknamed the Paypal of the Bitcoin world have been known for their trading, purchase and wallet services. This situation is another reason why storing Bitcoins is best done on the customers end. The storage of Bitcoins on any online service can have privacy ramifications if they are suddenly forced like coinbaseto turn over their records.

If you are a US customer with information already on coinbase, if you have been doing anything against US tax law you could be in trouble. If you are a US customer considering using coinbase and are not happy with this, it is recommended that you store Bitcoins on your own local wallets.

This sort of summons could set a precedent and cause such action to happen in other parts of the world, and thus following the advice to keep control of your Bitcoin balances and buying bitcoins from private individuals or mining them carries less of a risk of such an occurrence.

Storing funds in ANY online wallet service carries a risk of theft or loss of coins outside of your control, often with little recourse. Bitcoin was designed to have the responsibility of storing coins long term on the users. A good rule of thumb is if you are not the only person with your wallet private keys, it is not securely stored.

If you are storing small amounts and day to day amounts, a standard desktop or mobile wallet is good enough, secured by a password with a backup of the wallet file stored both on and offsite. For larger amounts of long term storage consider a paper wallet, or for larger day to day amounts, storage and handling consider a hardware wallet such as TREZOR or LEDGER which can be used on compromised computers without loss of funds as they do not leak private keys to the host machine.

Storing the wallet seeds safely away from them means they can be recovered in the event of failure, and the chance of having coins stolen by malware are low.

Following the above security tips, you can safely store your bitcoins yourself and avoid such a risk of sudden disclosure of data pertaining to yourself, which may well be out of your control. We will update on the plight of coinbase as soon as new information becomes available.