United States, as the home of Silicon Valley does not just boast only as the capital of tech companies. It also has one of the strongest and outstanding cryptocurrency and blockchain friendly states, having Bitcoin ATMs in virtually every corner of the cities. So far, the government of the United States is yet to exercise any constitutional power to regulate cryptocurrencies and blockchain technologies. Thus, it an left as an exclusion of states within the country. This means that states are at liberty to set their own regulation. For example, the state of Arizona in 2017 passed the Arizona House Bill 2417 to regulate blockchains and smart contracts. Vermont also passed a bill to recognize the admission of data that was embedded on the blockchain network as evidence in court. This was done without the need for verification. Some of the most friendly cryptocurrency states in terms of policies and regulations are Tennessee, Kansas, South Carolina, Texas and Montana. However, the government of the United States remains skeptical on the financial instability that is posed by the decentralization of the technology. But it has given leverage to its 50 states to come up with their own laws and policies concerning cryptocurrency and blockchain technology. One can only but wonder if the United States has been fair to cryptocurrency.
On US Cryptocurrency Regulation and Regulators
In 2013, a bureau of the Treasury Department of the United States (FinCen) declared that virtual currencies do have legal tender status in any jurisdiction. This has not however birthed hostile policies geared towards the technology as the residents of the country controls the second largest volume of Bitcoin in the world, holding at 26%. Regulatory bodies in the United States have several definitions for cryptocurrency.
The Security and Exchange Commission (SEC) for example views cryptocurrency as a security. It has continued to scrutinize the lack of security laws guiding the currency though. But in 2018, their main focus was on initial coin offerings. The rate at which coin offerings were being released was so alarming that they had to step into the scene, stepping up efforts to make policies to make coin offerings more secured. SEC has the power to regulate securities, derivatives based on securities as well as their markets. The first issue recorded of whether investments in cryptocurrencies – Bitcoin to be précised – are to be considered as securities is resolved. In the resolution, federal and state courts (SEC v. Shavers) held that such investments are to be considered as securities and therefore relevant, whether they are purchased with fiat currency or cryptocurrency. The Commodity Futures Trading Commision (CFTC) views Bitcoin as a commodity. Christopher Giancarlo who is the commissioner of CFTC is known to be a crypto friendly regulator. He is a known crypto evangelist, advocating for friendly policies geared towards the advancement of cryptocurrency.
The Internal Revenue Service (IRS) sees cryptocurrency, not as a currency but as a property. In 2014, it released an issued guidance on the difficulties involved in taxing the digital currency, and then it proposed ways in which it should be taxed. According to the IRS, the use of digital currency is somewhat a realization event. And the amount realized is the market value of the property received.
Also, on the sale of digital currency, there is either a taxable gain or loss. This is determined by subtracting the basis of the seller from the amount gotten from any sale. This characterization of the gain or loss is rooted on whether the seller is an holder of the digital currency as a capital asset, or if the investor is involved in a business where he holds the digital currency as inventory or any other property. Miners of cryptocurrencies are required to make known the true market value of the digital currencies that they mined, with regards to date of receipt of their respective gross income. Also, a miner who works for a mining company as an employee is required to pay self-employment tax on their net earnings.
So there you have it. In my opinion, I will say the United State has been fair towards cryptocurrency. Most of the policies surrounding the digital currency in the country were founded on facts that can be proven.