Coin Center, a leading cryptocurrency advocacy organization, has won the right to sue the U.S. Treasury Department over an amendment to the tax code that it claims is “unconstitutional.” This amendment requires Americans to report specific cryptocurrency transactions to the Internal Revenue Service (IRS).
On August 9, Circuit Judge Karen Nelson Moore of the U.S. Court of Appeals for the Sixth Circuit overturned a previous dismissal of the case by U.S. District Court Judge Karen Caldwell of the Eastern District of Kentucky. Judge Caldwell had previously ruled that Coin Center’s lawsuit was not yet “ripe” for judicial review, as the plaintiffs had not shown that they had suffered actual harm.
The contested amendment is part of Section 6050I of the U.S. tax code, which was included in the $1.2 trillion Infrastructure Investments and Jobs Act passed in 2021. It mandates that individuals involved in digital asset transactions exceeding $10,000 must collect and share personal information—such as names, Social Security numbers, and addresses—with each other and the authorities.
This requirement has drawn significant criticism from the cryptocurrency community, who argue that it violates the privacy and pseudonymity that are central to cryptocurrency transactions.
Coin Center filed its lawsuit against the Treasury Department and the IRS in June 2022, arguing that the amendment infringes on multiple constitutional rights, including the First Amendment’s right to free expression and the Fourth Amendment’s protection against unreasonable searches and seizures.
While Judge Moore found that some of Coin Center’s privacy concerns were premature for consideration, she determined that three of the group’s claims—related to the Fourth Amendment, the First Amendment, and the enumerated powers of Congress—were sufficiently developed for the court to hear.
Judge Moore stated, “The enumerated-powers claim presents an exceedingly simple, pure legal issue: either Congress exceeded the powers given to it by the Constitution or it did not.” The ruling to send the case back to a lower court for further proceedings means that Coin Center can now argue the merits of its constitutional claims against the reporting requirement.
Peter Van Valkenburgh, Coin Center’s director of research, expressed optimism about the ruling, saying, “The privacy of those associations, the names and personal information of Americans who support our mission through donations is our constitutional right, and we’re excited to move forward defending that right on the merits.”
The case will now return to the lower court, where Coin Center will present its arguments on the constitutionality of the tax reporting requirements. The Treasury Department and the IRS have yet to comment on the ruling.