Can the government track Bitcoin?

Apart from data analysis that is done either alone or in collaboration with private companies, authorities may request information from centralized exchanges. By regulation, centralized exchanges may also be obligated to share such information. However, not all cryptocurrency exchanges cooperate with the authorities.

A centralized exchange is a cryptocurrency exchange operated by a single entity, such as Coinbase. A centralized exchange must comply with regulations to become a licensed operator in a particular country or region.

For example, to reduce cryptocurrency anonymity and cryptocurrency abuse, most centralized exchanges incorporate Know Your Customer (KYC) checks. KYC is for verifying the customer. identity, as well as assisting authorities in analyzing activity on the blockchain. In practice, individuals are required to submit various documents and their data before being allowed to trade, invest, and trade.

After KYC is enforced, exchanges may be required or required to share that data with law enforcement. Because exchanges have individuals.” Personal data and trading data, so may governments. Using information obtained from centralized exchanges, the IRS can use her KYC checks and corresponding personal information to identify unknown Bitcoin wallets.

Nevertheless, not all exchanges use KYC. For example, decentralized exchanges (DEXs) are headquartered and not operated by a centralized corporation or small group of individuals, making them difficult to comply with.

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