- The U.S. is currently a hostile ground for the crypto ecosystem.
- The SEC’s run-in with major crypto firms discourages sentiment in the market.
- U.S. citizens need to be aware of crypto regulations before trading.
The current unsavoury regulatory environment in the U.S. puts its position as the leading global crypto nation at risk. Such was the opinion of ARK Invest analyst Yassine Elmandjra in a note to their clients.
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The actions of its crypto regulators have brought about this discouraging sentiment. To that end, there are reports that other countries like Korea, Switzerland, and the United Arab Emirates are looking to usurp the U.S. as the de facto leader.
For the longest time, the SEC has — some may say — acted with impunity towards the crypto ecosystem. They, via the unwavering efforts of their chair, Gary Gensler, have been hostile towards crypto firms and leaders.
Centralized Exchanges (CEXs) such as Coinbase and, most recently, Binance have been caught in their cross-fire. The SEC has also dealt with Gemini, Paxos, Kraken, Genesis, Changpeng Zhao, and Sam Bankman-Fried, amongst others.
They have consistently argued that crypto is a security and, as such, should be regulated by them. Yet, crypto exchanges, firms and insiders have always rebuffed it, leading to numerous disputes.
Overall, the country’s stance regarding crypto has been so-so. This is due to a need for more clarity in the regulations.
Therefore, as a citizen or resident, you must be aware of the crypto regulations before trading.
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This article examines the top 10 things to know about these regulations. Let’s dig in:
1. Is crypto legal in the U.S.?
Yes, crypto is legal. However, it is not considered legal tender.
2. Are crypto exchanges legal in the U.S.?
Yes, they are, but regulation differs in each state and regulator.
3. Who are the crypto regulators?
At the federal level, they include the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Treasury Department through the Internal Revenue Service (IRS), the Office of the Comptroller of the Currency, and the Financial Crimes Enforcement Network (FinCEN).
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4. Which crypto regulator is the most important?
The main ones are FinCEN, SEC, and CFTC, which deal with whether crypto is a money transmitter, security, or commodity.
5. Can Crypto regulations impact prices?
Restrictive regulations can adversely affect crypto prices. However, the U.S. aims to build a functional regulatory framework.
6. Can crypto profits be taxed?
Crypto profits are liable for tax applications due to financial information the IRS obtains from CEXs like Binance or Coinbase.
7. How do the U.S. crypto exchanges verify user identities before allowing them to trade?
They do this by obtaining the following details — name, phone number, address, photo of your ID, and selfie.
8. Can a U.S. citizen or resident trade on a foreign crypto exchange?
No, they cannot. FinCEN regulations prevent such trading, hence why some exchanges have a U.S. branch.
9. Can crypto be regarded as security?
If crypto is generated via mining, it cannot be regarded as a security. However, if it passes the Howey Test, it is regarded as one and falls under the jurisdiction of the SEC.
10. What new regulations would soon be implemented?
The Biden administration proposed the stablecoin legislation — a U.S. digital dollar. Furthermore, U.S. agencies also planned strategies like crypto as collateral for bank loans and bank custody of crypto assets.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.