Introduction
Cryptocurrencies in America are not considered legal tender. However, Cryptocurrency exchanges are legal and the regulations vary by state. In this article, we will be discussing the entire regulation and taxation situation in the US, along with state laws that pertain to Cryptocurrency and blockchain technology. Let’s get started!
Cryptocurrency Regulation Outlook
It is quite overwhelming to find a reliable lawful approach to Cryptocurrencies in the US. Every law that is governing centralized crypto exchanges varies by state. Moreover, federal authorities differ in their definition of the term – Cryptocurrency. The FinCEN (Financial Crimes Enforcement Network) doesn’t consider Cryptocurrencies to be a legal tender. However, FinCEN has been considering exchanges as money transmitters since 2013, based on the fact the tokens are other value that substitutes for currency. On the contrary, the IRS considers Cryptocurrencies as property and has issued tax regulation for that reason.
Regulatory laws for Cryptocurrency exchange in the US are also in an indecisive lawful territory. Many of the federal regulators allege jurisdiction. The Securities and Exchange Commission has indicated that it considers Cryptocurrencies as securities. In March 2018, SEC stated that it was seeking to apply securities laws comprehensively for exchanges and digital wallets. On the contrary, the Commodities Futures Trading Commission has adopted a friendly and do-no-harm approach, explaining Bitcoin as a commodity and permitting Cryptocurrency derivatives to buy and sell openly.
The Justice Department is working with the CFTC and SEC over future Cryptocurrency regulations to make sure that the customers are effectively protected and regulatory oversight is more streamlined. Treasury of the US has emphasized an urgent need for crypto regulation to combat domestic and global criminal activities. In January 2018, Steve Mnuchin and Treasury Secretary declared a new FSOC working group to look at the progressively more crowded Cryptocurrency marketplace.
In June 2015, New York managed to become the first state of the US to regulate virtual currency companies via state agency rulemaking. In 2019, there were 32 states of the US that introduced legislation accepting or encourage the utilization of Bitcoin and blockchain distributed ledger technology (DLT). A few states passed them into law. However, some of them established task forces to revise the further use of technology. In 2017, the FTC gave LedgerX – Crypto trading platform operator in the US, permission to become the first federally regulated digital currency options exchange and clearinghouse.
State Regulations Pertaining to Cryptocurrency and the Blockchain Technology
New York
Crypto Regulatory Sandbox – In 2015, New York released the “BitLicense” that is needed by any virtual currency company serving New York business owners or residents. The New York State Department of Financial Services (NYDFS) established the BitLicense to provide guardrails that safeguard customers and root out illegal doings without stifling advantageous improvement. According to the legislation, any individual or company who is involved in any of the following activities in New York should obtain a BitLicense:
- Performing exchange services as a customer business
- Trading virtual currency as a customer business
- Virtual currency transmission
- Issuing, controlling or administering a virtual currency
- Maintaining custody of virtual currency on the behalf of others
Trading Ban – No
Banking Ban – No
Tax Haven Region – No
Is it best Place for License – Yes, BitLicense can be acquired by following simple instructions in New York
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