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IRS doubles down, investing another quarter million dollars into tracking crypto transactions

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On Sept. 8, the IRS’s criminal investigation department signed a $249,900 contract with a blockchain analytics firm to expand its crypto tracing tools. 

The contract provides limited information, but it follows an overarching trend of the IRS stepping up its game when it comes to crypto. 

The firm behind the contract, Blockchain Analytics and Tax Software, is a relative unknown compared to familiar faces in analytics like Chainalysis. The firm’s only prior government contract was for only $9,800 with the U.S. Treasury for serving as an expert witness.

Just last week the IRS put out a request for submissions for a pilot program to track cryptocurrency transactions. A staff member at the IRS confirmed to Cointelegraph that this new contract is not a response to that request.

Blockchain Analytics and Tax Software had not responded to Cointelegraph’s request for comment as of press time.

IRS investigative capabilities played a major role in a massive seizure of crypto bound for terrorist networks last month.

Meanwhile, for more civilian purposes, this year’s tax forms in the U.S. will put the question of whether a taxpayer used crypto in 2020 front and center.



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New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.