US taxman signs on to use Coinbase Analytics

It’s a done deal. The Internal Revenue Service (IRS) has signed a contract to use Coinbase Analytics.

According to the official U.S. government website with information regarding people who make, receive, and manage federal awards, the IRS signed a one-year US$124,950 contract with Coinbase that gives them access to Coinbase Analytics. The IRS signed the contract on July 15, and the contract will become effective on July 23.

Two deals in one week

The deal between the IRS and Coinbase (NASDAQ: COIN) comes just a few days after it was confirmed that the U.S. Secret Service has signed a four-year $183,750 contract to use Coinbase Analytics. It seems a bit strange that the IRS paid roughly 70% of what the Secret Service paid to use Coinbase Analytics for four whole years; however, there is no available information regarding the pricing model for Coinbase Analytics.

Both deals echo a recent statement made by Coinbase CEO Brian Armstrong, who said: 

“It’s expensive to build this capability [Coinbase Analytics], and we [Coinbase] want to recoup costs. There is an existing market for blockchain analytics software, so we sell it to a handful of folks as well. It also helps us build relationships with law enforcement which is important to growing crypto.”

After Coinbase’s deal with the Secret Service began receiving media attention, Armstrong took to Twitter to discuss why Coinbase sells its blockchain analytics software. In his explanation, Armstrong says that it is expensive to build the platform, therefore, Coinbase sells its blockchain analytics platform to third parties so that they can recoup their costs as well as build relationships with vital government agencies.

Is the DEA next?

In June, it was revealed that Coinbase had offered to license out their analytics platform to both the IRS and the Drug Enforcement Administration. The IRS has already signed on to use Coinbase analytics, but the DEA has yet to accept or deny Coinbase’s offer.

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