Understanding the Legal Status of Cryptocurrency in the United States

Cryptocurrency is legal in the United States. Image Credit : Cryotonewsz.com

Cryptocurrency is legal in the United States, but the legal status of different cryptocurrencies can vary depending on the specific use case.

In 2013, the US Internal Revenue Service (IRS) issued guidance stating that virtual currencies, including cryptocurrencies, would be treated as property for tax purposes. This means that any transactions involving cryptocurrency may be subject to capital gains taxes.

In 2017, the US Commodity Futures Trading Commission (CFTC) approved the first bitcoin futures contracts, which allowed investors to speculate on the future price of bitcoin. The same year, the US Securities and Exchange Commission (SEC) also began regulating initial coin offerings (ICOs) as securities, meaning that they must be registered with the SEC and follow all relevant regulations.

In addition, several states have passed legislation related to cryptocurrency. For example, New York state has the BitLicense, which is a regulatory framework for businesses that deal in virtual currency.

Overall, while cryptocurrency is legal in the United States, it is subject to various regulations and laws depending on how it is being used. It is important for individuals and businesses to be aware of these regulations and to comply with them when using or dealing with cryptocurrency.

Sure, here are a few more points to consider about the legal status of cryptocurrency in the United States:

• In 2019, the Office of the Comptroller of the Currency (OCC) announced that national banks and federal savings associations in the United States are allowed to provide custody services for cryptocurrencies. This means that banks can hold and safeguard cryptocurrency on behalf of their customers.
• In 2020, the OCC also issued guidance stating that banks are allowed to use stablecoins, which are cryptocurrencies that are pegged to the value of a traditional asset like the US dollar, to facilitate payments.
• The Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury, has issued guidance on the use of cryptocurrency for money laundering and other financial crimes. FinCEN requires certain businesses, including virtual currency exchanges, to register with the agency and follow anti-money laundering (AML) and know-your-customer (KYC) requirements.
• While cryptocurrency is legal in the United States, it is important to be aware that it is not legal in every country. Some countries have banned or restricted the use of cryptocurrency, so it is important to be aware of the laws and regulations in the specific country where you are using or dealing with cryptocurrency.
• In 2020, the OCC issued a letter stating that national banks and federal savings associations in the United States are allowed to use independent node verification networks (INVNs) to validate transactions and perform other functions traditionally performed by a central authority. This means that banks can use INVNs, such as those used by certain cryptocurrencies like bitcoin, to perform certain functions without the need for a central authority.
• The US federal government has also taken steps to regulate the use of cryptocurrency in elections. In 2019, the Federal Election Commission (FEC) issued guidance stating that political committees are allowed to accept cryptocurrency as a form of campaign contribution, as long as they follow certain reporting and disclosure requirements.
• The use of cryptocurrency for illegal activities, such as drug trafficking or money laundering, is also illegal in the United States. Federal law enforcement agencies, such as the FBI, have successfully prosecuted individuals for using cryptocurrency to facilitate illegal activities.
• In 2020, the US Department of Justice (DOJ) announced that it had created a task force to combat the use of cryptocurrency for illegal activities, such as money laundering and fraud. The DOJ also announced that it had established a working group to coordinate the efforts of various federal agencies, including the FBI and the IRS, to combat the use of cryptocurrency for illegal purposes.
• The US Federal Reserve has also expressed interest in exploring the use of central bank digital currencies (CBDCs), which are digital versions of a country's traditional fiat currency issued and backed by the central bank. In 2020, the Federal Reserve announced that it was exploring the potential use cases for a CBDC and would work with other central banks and international organizations to research and develop potential CBDCs.
• In 2020, the US Office of Foreign Assets Control (OFAC) added several individuals and entities involved in the development and use of cryptocurrency to its sanctions list. OFAC is a bureau of the US Department of the Treasury that is responsible for implementing and enforcing economic and trade sanctions against countries, organizations, and individuals. The inclusion of these individuals and entities on the sanctions list means that US persons and businesses are generally prohibited from conducting transactions with them.

Overall, it is important for individuals and businesses to be aware of the laws and regulations surrounding the use of cryptocurrency in the United States, and to comply with them when using or dealing with cryptocurrency.