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 an executive order imposing on the US federal government to create a concept for regulating a sector such as a cryptocurrency market. This, of course, involves a great deal of work regarding coordinating the efforts of US financial and tax entities. For their task remains the creation of crypto-dedicated tax articles and financial reporting standards.

Cryptocurrencies in the USA – the current situation

With the current development of establishing federal legislation relating to cryptocurrencies in the US, it is difficult to establish a unified legal position at the state level. The Financial Crimes Enforcement Network (FinCEN), an office that is the US Treasury Department’s anti-money laundering and counter-terrorist financing unit, indicates that cryptocurrency is not legal tender. Nevertheless, at the same time it defines a cryptocurrency exchange as a money transmitter, where a token is a substitute for currency in the traditional sense. The same perspective is shared by the US Internal Revenue Service, treating cryptocurrency as a “digital representation of value.”

The cryptocurrency market in the United States and cryptocurrency exchanges

The Bank Secrecy Act (BSA Compliance Program), which applies to cryptocurrency exchanges in the United States, regulates their activities as perfectly legal when:

– have registered with the Financial Crimes Enforcement Network;

– have implemented an AML program;

– keep tax records;

– submit reports to dedicated offices.

In contrast, according to the US Securities and Exchange Commission (SEC), cryptocurrency is in fact a security that is covered by comprehensive securities regulations for digital wallets and exchanges. Continuing, the Commodity Futures Trading Commission (CFTC) liberally views cryptocurrency as a commodity and approves the overt trading of digital currencies.

The international Financial Action Task Force (FATF) guidelines presented in June 2019 on the crypto market contributed to FinCEN’s decision to enforce the following on cryptocurrency exchanges: compliance with the “Travel Rule” (a rule that allows financial institutions to determine the identities of senders and recipients in cross-border transactions) and the collection of information on the originators and beneficiaries of cryptocurrency transfers. This makes virtual currency exchanges in the US regulated in the same way as traditional money transfers. What’s more, FinCEN issued a notice of proposed rulemaking in October 2020, referring to changes in the case of 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 regulation of cryptocurrencies is being agreed upon jointly by 3 entities: Department of Justice, SEC and CFTC (Commodity Futures Trading Commission). This is implicitly intended to provide greater security for users who use digital currencies on a daily basis and improve regulatory oversight. On the part of President Joe Biden’s administration, an announcement came out in 2021 regarding stablecoin, to begin taking steps to stem the potential rise in the value of this type of asset. This was manifested that same year by the Presidential Task Force on Financial Markets issuing special recommendations with a proposal for new regulations. In addition, the status of cryptocurrency service providers was also debated in the U.S. Congress in 2021, and new rules were included in the Biden administration’s Infrastructure Act.

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