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While they have been around for about a decade, cryptocurrencies are already the talk of the town. The adoption of cryptocurrency has been quite impressive. Already, some companies are accepting payments in cryptocurrency. 

Cryptocurrencies are attracting the attention of both individual investors and institutional investors. While that may be the case, the big question is, are cryptos legal in the US?

Cryptos legal status in the US

Just like in many developed countries, cryptocurrencies are not illegal in the US. The US treasury defines cryptocurrencies as virtual currency. They are also classified as commodities. If you are in the US, you are free to invest in cryptocurrencies. It is a prevalent and profitable trade in the region. 

The federal government's attention has been on cryptocurrency. To this effect, they have even passed laws and regulations that affect cryptos. In some cases, the states support the adoption of blockchain among their populations. That is by putting in place favorable regulations.

The exciting part is that some states see cryptocurrencies as an opportunity to stimulate their local economies. To incorporate them into their economy, regulations are in place. That is to allow investors to hold the assets legally and safely.

USA Cryptocurrency regulations

Are cryptos legal in the US? Yes, they are. Investing in digital currencies is permitted in the US. But, there are some regulations that apply.

1. Anti-laundering requirements and money transmission laws

Illicit funds can be smuggled into the system through cryptocurrencies. This is one of the restrictions that impede cryptos' legal status in countries. The regulations stipulate that money transmitters have to do a detailed risk assessment. That is on their exposure to money laundering. It also provides that money transmitters must also put in place anti-laundering programs in their systems. 

The programs should be designed such that they should train their personnel to detect suspicious transactions. They should also have internal controls and policies. That is to see to it that there is ongoing compliance. It would help if you also appointed persons responsible for overseeing compliance. The programs also have to be monitored. 

To ensure cryptos' legal transmission, exchanges and the relevant parties must adhere to this regulation.

2. Sales regulations

Cryptocurrency sale is regulated under several conditions. For one, its sale is considered money transmission under state law. It is also regulated if it includes the sale of a security as per federal laws. 

It is also worth noting that if a cryptocurrency is considered a commodity, it is protected by CFTC from attempts in market manipulation. In other words, the agency has authority against market manipulation. 

3. Taxation

Note that IRS will be taxing cryptocurrency as property and not as currency. Cryptos' legal investment will require that businesses and individuals owning cryptocurrencies allow for taxation. Crypto owners, therefore, have responsibilities on their end to uphold. 

For one, they need to keep accurate and detailed records of crypto sales and purchases. They are also required to pay taxes on revenue generated from the purchase of goods and services with digital currency. If individuals or businesses make gains from the sale of cryptocurrencies in exchange for cash, they should also pay tax.

The other instance where the taxes apply is the payment of taxes on any mined cryptocurrencies. Holders should keep in mind that this should be on the fair market value of the asset. 

4. Licensing and ownership requirements

Any crypto fund manager investing in digital currency as futures contracts is expected to register as commodity trading advisors. Crypto hedge fund managers using margin or leverage should also register with the NFA and CFTC.

Crypto funds investing in the different cryptocurrencies are required to know how the individual cryptocurrencies are classified. Whether they are commodities or securities. This information should help them comply with the Company Act as required. 

5. Estate planning

One thing that qualifies something as an estate asset is its value. Cryptocurrencies have value and are likely to be considered estate assets. Cryptocurrency holders with intentions of bequeathing their assets to their kin are required to provide detailed information on the wallets they hold.

Note that this will vary depending on the wallets they are holding. Instructions provided in the will should be simple so that they can be interpreted even by persons that are not familiar with cryptocurrency.

Crypto holders are advised to keep the keys to their wallets in a secure manner. For instance, they can consider a safe deposit box only accessible to the successor or trustee of the will. 

6. Mining

Requirements regarding cryptos legal mining are very straightforward. Provided you can own and use cryptocurrency where you are in the USA; you should be able to mine it in the same location. If it is illegal in your area, then mining it in the place may be impossible. 

Only a few regions have a temporary ban on crypto. Note that mining cryptocurrency in government-issued devices is also banned.

7. Securities regulations

Note that the SEC has authority over the transactions of digital assets that fall under the securities category. This means that you should register for crypto legal holding. Digital assets considered as securities must be registered with the SEC. 

Remember that there are other state laws regarding cryptocurrencies considered securities on top of the federal securities laws. The regulations, known as blue sky laws, are not in all cases preempted by federal laws. Therefore, anyone owning securities of this nature must conform with the council to confirm if the blue-sky laws are applicable. Tokens constituting securities also have other requirements. A broker should only facilitate the sale of the securities if licensed with SEC and is a Financial Industry Regulatory Authority member. 

You should also trade the digital asset on licensed exchanges approved by SEC.

Are cryptos legal in the US? Yes, they are

Cryptos' legal status in the US is now evident. The Federal government is aware of its existence and approves of it. The government understands how instrumental it could be to the growth of its economy. 

Different states and bodies have set regulations to ensure that digital assets are integrated into the system legally and safely.

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