Crypto regulation is currently one of the top priorities of the US government. Although, there hasn’t been specific rules and regulations governing crypto activities in the country. Different US governing bodies are working to develop frameworks to regulate cryptocurrency within the country of over 332 million population.
Image source – financemagnates.com
The United States of America ranks third as the most populous country in the world, and more than 16% of the country’s adult population owns at least one or more crypto coins. With this huge percent increase, the US government sees a need to protect its populace from the risks associated with crypto and also help maximize its benefits.
Different government officials have raised motions concerning crypto regulations in the US; the notables are; Senator Patrick Toomey (Pennsylvania), Deborah Stabenow (Michigan) & John Boozman (Arkansas), Cynthia Lummis (Wyoming) & Kristen Gillibrand (New York), and Rep Josh Gottheimer (New Jersey).
At the same time, states like Colorado, Wyoming, and Oklahoma are providing fertile ground for crypto adoption in the US with their regulations. Also, states like Ohio are leading by example by accepting tax payments in crypto.
According to White House press releases on the 9th of March, 2022, President Joe Biden gave an Executive Order (EO) to ensure responsible development of Digital assets (crypto and other DLT technologies). The key importance of the EO is for government parastatals to capture the benefit & potential of digital assets while addressing the risk associated with them.
Since then, different government parastatals have been working hand-in-hand to create policy recommendations and frameworks that address major priorities mentioned in the Executive Order, which include: financial inclusion; consumer & investor protection; economic competitiveness & leadership in the global financial system; countering illicit finance, promoting financial stability; and responsible innovation.
After six months of research, the nine reports of the EO submitted to President Biden reflect cooperation and a positive stance toward crypto. The report reflects stakeholders’ expertise, from industry experts to government bodies, academia, and the general US populace.
The report encapsulates a clean and straightforward blueprint for developing and growing Digital assets (and other DLT technology products) in the country. The EO report also identifies and suggests steps (like increasing the implementation of existing laws and creating highly valued standards for crypto products, services and mining) to lessen the downside risk.
Furthermore, the report appeals to various agencies to promote innovation by pioneering and encouraging private sector research on digital assets. And nurtures the ongoing study of the Federal Reserve Central Bank Digital Currency (CBDC). However, the reports also state the adverse effects and risks associated with CBDC research.
US Crypto Taxation
The IRS press release of March 2014 gave the body authority to tax Bitcoin and other cryptocurrencies as “property.” The release revealed every crypto account is taxable regardless of position, from individual to corporate crypto portfolio. The document titled “Guidance on virtual currency” further shows procedures for crypto investors to take in paying tax. According to the paper, crypto investors/traders should keep records of all their transactions for tax calculation.
Requirement for crypto licenses in the US
Currently, no primary body is responsible for issuing digital asset licenses in the US. However, crypto startups, individual investors, and companies offering crypto services or products to the US population are to acquire a permit, depending on their activities and mode of operation.
For instance, crypto fund managers investing in futures trading are to register as; CPO (Commodity Pool Operator) and CTA (Commodity Trading Advisor) with NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission).
Also, the 1940 Investment Advisor Act, State Investment Advisor law, and the 1940 Company Act require investment companies investing in securities to register with the SEC (Security Exchange Commission).
However, US law has not recognized digital assets (like crypto) as commodities or securities. The unrecognition has been the central issue surrounding regulating cryptocurrency in the country. But, irrespective of the crypto company’s license, digital assets are subject to probation from the SEC and CFTC.