Catenaa, Wednesday, September 17, 2025- The Internal Revenue Service has widened its oversight of cryptocurrency investors, moving from targeting individual traders to issuing broad “John Doe” summonses for user records at major exchanges.
Legal experts say this expansion allows real-time tracing of transactions across platforms including Coinbase, Kraken, Poloniex, and Circle.
Since 2017, the IRS has gradually increased its crypto investigations, initially focusing on accounts meeting specific transaction thresholds.
By 2021, the agency secured court approval to pursue Kraken users transacting $20,000 or more between 2017 and 2020 and Circle customers trading similar amounts.
Coinbase faced a 2016 summons affecting 14,000 accounts, which was later narrowed in court.
The enforcement efforts generated $3.5 billion in crypto seizures during fiscal year 2021, representing 93 percent of the IRS’s total asset seizures that year, according to the agency’s Criminal Investigation Division.
By mid-2023, the IRS had opened 216 examinations and sent nearly 15,000 “soft letters” to users identified through exchange data.
Tax attorney David Klasing noted that courts require only minimal justification for John Doe summonses. Agencies must demonstrate a “reasonable basis for believing noncompliance” and that information is not otherwise readily available.
Critics say the broad reach of these summonses provides limited protection for individual investors, as the IRS does not need to prove wrongdoing by every person in the targeted group.
The IRS’s expanded surveillance comes amid rising crypto adoption and regulatory focus on ensuring compliance. Exchanges and investors are adjusting reporting and custody practices to align with ongoing government oversight.
