The IRS believes that some US citizens who utilize Bitcoin may be evading taxes. Bitcoin transactions are recorded publicly, but there is no identifying information connected to these transactions making it difficult for the IRS to bring a case against anonymous Bitcoin users. The Treasury Department put the IRS under pressure for its lack of involvement which lead to the IRS investigating Bitcoin records for 2013-2015. The IRS found three potential tax evasion cases leading to a court petition for Bitcoin to provide information on its users.
Bitcoin is facing similar issues that previously established banks have faced in regards to tax evasion. Since services like Bitcoin are out of the scope of traditional regulations set for banks, the government is seeking for regulatory insight into the companies and the people who use such services. This is due to the importance of the government and financial institutions needing to know who exactly is moving money and where.
Such regulations can change the scope and evolution of such fintech companies as well as affect customers’ behaviors when utilizing these services. We may see that with the increased regulations, such institutions become more traditional in structure in order to meet government demands.