The consequence of popularizing cryptocurrencies is the implementation of further legal requirements regulating their functioning. This both leads to the development of the entire industry and makes it difficult for community members to keep abreast of what the legality of digital currencies looks like in different countries.
This can be seen, for example, in the United States, where on March 9, 2022, President Joe Biden signed a decree requiring the U.S. federal government to create a concept for the regulation of cryptocurrencies. This is, of course, associated with an enormous amount of work to coordinate the efforts of American entities of a financial and tax nature. Their task remains to create tax articles and financial reporting standards dedicated to crypto.
Cryptocurrencies in the USA – the current situation
With the current development of federal cryptocurrency legislation in the US, it is difficult to establish a unified legal position at the state level. The Financial Crimes Enforcement Network (FinCEN), the US Treasury Department’s anti-money laundering and terrorist financing office, indicates that cryptocurrency is not legal tender. Nevertheless, at the same time, it defines the cryptocurrency exchange as a money transmitter, where the token is a currency substitute in the traditional sense of the word. The same perspective is shared by the US Tax Office, treating the cryptocurrency as a “digital representation of value”.
The cryptocurrency market in the United States and cryptocurrency exchanges
As for cryptocurrency exchanges located in the United States, they operate legally under the influence of the Banking Secrets Act (BSA Compliance Program). This instructs cryptocurrency exchange service providers to:
registered with the Financial Crimes Enforcement Network;
implemented the AML / CFR (Anti-Money Laundering / Counter Financing of Terrorism) program;
submitted reports to dedicated offices.
In turn, in the opinion of the US Securities and Exchange Commission (SEC), cryptocurrency is in fact a security that is subject to comprehensive securities regulations for digital wallets and exchanges. Continuing, the Commodity Futures Trading Commission (CFTC) liberally views cryptocurrency as a commodity and approves of overt trading in digital currencies.
The Crypto Market Guidelines of the International Financial Action Task Force (FATF) presented in June 2019 contributed to the fact that FinCEN decided to enforce the following issues from cryptocurrency exchanges: adherence to the “Travel Rule” (a principle that allows financial institutions to determine identity senders and recipients in the case of cross-border transactions) and collecting information on initiators and beneficiaries of cryptocurrency transfers. This makes the virtual currency exchange in the USA regulated in the same way as a traditional money transfer. Furthermore, FinCEN issued a Notice of Proposed Rulemaking in October 2020, referring to the changes to the “Travel Rule” and the implementation of further compliance obligations for cryptocurrency exchanges.
What is the future of the US cryptocurrency market?
The US Treasury Department noted that it is necessary to implement legislation to combat state and global criminal activity. FinCEN in December 2020 came out with a proposal to update the cryptocurrency market regulations to apply information archiving requirements on exchanges and crypto wallets. According to the assurances, this process would be completed by the autumn of 2022, and to complete it, it will be necessary to generate reports by exchanges regarding transactions exceeding the value of 10,000 US dollars and identification of wallet owners who make transactions over 3,000 US dollars.
Further cryptocurrency regulations are agreed jointly by 3 entities: the Department of Justice, the SEC and the CFTC (Commodity Futures Trading Commission). This implicitly is to ensure greater security for users who use digital currencies on a daily basis and to improve regulatory oversight. From the administration of President Joe Biden in 2021, a communiqué about stablecoins was issued to start measures to stop the potential increase in the value of this type of asset. One example of this was the issuance of special recommendations by the President’s Working Group on Financial Markets, proposing new regulations, the same year. In addition, the US Congress also debated the status of cryptocurrency service providers in 2021, and the new rules were included in the Biden Administration Infrastructure Act.
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