Inadequate Management of Digital Assets by IRS-CI
In a recent report, a federal oversight agency has highlighted the Internal Revenue Service’s Criminal Investigation division’s inadequate management of digital assets, stressing the necessity for reform. The U.S. Treasury Inspector General for Tax Administration uncovered notable lapses in the IRS-CI’s adherence to established protocols during the handling of seized cryptocurrencies between December 2023 and January 2025.
Findings and Recommendations
The assessment revealed that the agency frequently neglected to maintain detailed seizure documentation, including essential information such as asset addresses, seizure dates, and specific amounts confiscated.
Among the suggested reforms endorsed by IRS-CI are measures aimed at ensuring all personnel are well-versed in the mandatory protocols for creating seizure memorandums. The agency is also encouraged to develop a comprehensive inventory system that accurately tracks and manages the quantity of digital assets seized, thereby ensuring uniformity in their treatment. Additionally, the report called for an update to internal guidelines, specifying timelines for the preparation of seizure documents and the regular maintenance of inventory records.
The Growing Significance of Digital Asset Seizures
The growing significance of digital asset seizures has gained traction since the Trump administration’s initiatives to create a national reserve of cryptocurrencies like Bitcoin. Initial suggestions from White House officials involved accumulating digital currencies mainly from criminal investigations, although alternative strategies involving tariffs and adjustments to gold certificates have been discussed.
Current Estimates of Cryptocurrency Holdings
Current estimates regarding the amount of cryptocurrency held by the U.S. government fluctuate, with figures indicating approximately 200,000 Bitcoin as of March, valued over $21 billion. Notably, large-scale seizures include over 94,000 Bitcoin linked to the notorious Bitfinex hack of 2016, alongside more than 50,000 Bitcoin confiscated from the Silk Road dark web marketplace.
