Crypto Legislation in the USA
Current status of crypto legislation and adoption across the US
In the last few years, U.S. federal regulatory agencies have issued a range of policies concerning their treatment of cryptocurrency transactions, investment gains, payment services, and activities other involving digital assets.
What are the current U.S. regulations that impact crypto?
The U.S. Securities and Exchange Commission (SEC) has said it views cryptocurrencies as securities and will apply existing securities laws to digital assets. This is important for retail investors because it means they are obligated to report realized gains and losses from crypto investments on their annual tax forms. Failure to do so will invite the scrutiny of the Internal Revenue Service, which has vowed to crack down on crypto tax dodgers.
The Commodities Futures Trading Commission (CFTC), by contrast, has classified Bitcoin and Ethereum as commodities. Cryptocurrency derivatives — most commonly, Bitcoin futures — are legally traded on public exchanges overseen by the CFTC. Institutional investment in cryptocurrency often takes the form of buying and selling futures contracts, including speculators and hedgers.
Cryptocurrency exchanges like Coinbase (COIN) are legal in the United States. They fall under the regulatory scope of the Bank Secrecy Act (BSA), a law overseeing the activity of financial institutions and payments transmitters. To stay compliant, crypto exchanges must implement Anti-Money Laundering and Know-Your-Customer programs. They need also to report pertinent information to regulators and obtain licensing from The Financial Crimes Enforcement Network, as well as payment transmitter licenses from states they operate in.
What has the Biden administration said about cryptocurrency regulations?
The Biden administration is taking a firmer stance on regulating the cryptocurrency sector than Trump officials.
SEC Chairman Gary Gensler said that bad actors in crypto should be prepared for tougher enforcement under Biden; that his agency will aggressively pursue enforcement actions; and that Congress should consider a law to regulate crypto exchanges.
“There is no authority to register and write rules to protect the investing public,” said Gensler. “The investing public would benefit from more regulation.”
The Treasury Department has published a tax plan that includes a section on crypto. The paper warned that authorities are failing to detect cryptocurrencies that are used to pay for illicit goods. It also said exchanges must report all crypto transactions over $10,000 in fair market value.
Janet Yellen, the Treasury Department Secretary, has said on numerous occasions that cryptocurrency firms are inadequately regulated by U.S. authorities.
The new Acting Comptroller of the Currency Michael Hsu said his agency is reviewing guidance and directives issued by Brian Brooks, his predecessor. The crypto community appreciated Brooks, former General Counsel at Coinbase, for his crypto-friendly policies. These included authorizing banks to provide crypto custody services and granting banking charters to crypto startups.
The Federal Reserve does not oversee regulatory enforcement of the cryptocurrency industry. However, the Fed has been conducting research on launching a digital dollar: a blockchain-powered, online-only version of the standard U.S. dollar. Those plans remain years away, according to Federal Reserve Chair Jerome Powell.
