The Internal Revenue Service could pull back its inquiry into around 1 million Coinbase customers accounts, requiring less information on the users.
According to a report in Fortune, the IRS said last week in a hearing over its fight with anonymous bitcoin buyers that it has been talking to Coinbase about limiting the information it needs to search for unreported income. Among the items it may not request are passwords and security settings for the accounts, noted the report.
Legal analysts have long thought the IRS would scale back the records it would demand, but up until last week’s court hearing, it hasn’t done much to prove them right. The IRS, on the flip side, has yet to respond to a letter from U.S. Sen. Orrin Hatch and included other lawmakers calling the agency’s case as “overly broad, extremely burdensome, and highly intrusive to a large portion of individuals.” The lawmakers pointed out in a letter to the IRS that Coinbase has more than 1 million customer accounts and 500,000 active customers that would be affected by the summons. It’s not clear if the IRS is going after other cryptocurrency exchanges. Coinbase is the largest in the U.S., it’s not the only one out there.