Cryptocurrency has become popular in recent years, and as it is increasingly adopted, governments are working hard to put regulations and rules in place to ensure users stay safe and operators function within the law.

In the US, the rules surrounding crypto are complex and constantly evolving. Some laws have been implemented at a federal level and apply to all states. However, other rules are implemented state by state. This means cryptocurrency laws can vary from state to state within the US.

In this article, we will look at a few key crypto sectors that regulations apply to and review various regulatory bodies and crypto laws in the United States.

Regulated Crypto Activity in the US  

In the US, the federal and state governments have been busy creating crypto regulations since 2009, when the first cryptocurrency, Bitcoin, was launched. There are now a few key crypto sectors that are regulated within the country, including, but not limited to:

• Crypto Investing: In the United States, initial coin offerings (ICOs), security tokens, and other crypto investments are typically monitored and regulated by the Securities and Exchange Commission (SEC). Since 2009, the SEC has been responsible for bringing action against any ICOs violating securities laws. In addition to the SEC regulating crypto investing, the Internal Revenue Service (IRS) also monitors crypto tax implications relating to businesses and individuals.
• Crypto Gambling: Gambling regulations vary from state to state, with some allowing gambling in all forms and others restricting certain forms of wagering. Cryptocurrencies have introduced another layer of complexity to the gambling industry, and most states require operators to hold a valid license for in-person, online, and crypto gambling activities, making this a regulated industry in the US. Michael Graw explains that the best crypto casinos are often licensed and registered outside the US to avoid tricky regulations. Curacao is a popular and reputable country for offshore crypto casinos due to the region’s lenient and friendly gambling rules. Some crypto casinos have gained popularity among players for allowing bettors to wager with digital currency and offering anonymous play options at no KYC casinos. No matter the wagering platform, in the US, crypto gambling winnings are subject to local laws.

• Crypto Transactions: In the US, crypto transactions are regulated, with regulations mainly relating to anti-money laundering efforts (AML) and know-your-customer (KYC) requirements.

• Crypto Mining: Crypto mining is another regulated crypto sector in the US. Again, some rules are imposed at a federal level, and others are determined at a state level. However, crypto miners must comply with regulations in their local area. Standard regulatory requirements relate to energy consumption, environmental impacts, and taxes. Depending on the state where crypto miners are located, a license or permit may also be required.

Regulatory Bodies

The United States is home to numerous regulatory bodies that oversee crypto activities within the country and ensure regulations and laws are being followed. Each regulatory body typically has its jurisdiction that it monitors and tasks for which it is responsible. A few of the regulatory bodies in the US include:

• • Securities and Exchange Commission (SEC): As mentioned earlier in this article, the SEC is in charge of regulating ICOs, securities markets, and securities tokens. This is one of the major regulatory bodies that monitors crypto investment to ensure operators follow US laws.
  • Commodity Futures Trading Commission (CFTC): The CFTC monitors commodity futures and options markets to ensure compliance with crypto laws.

• Financial Crimes Enforcement Network (FinCEN): FinCEN is a part of the US Department of the Treasury focused on fighting money laundering and terrorist financing. FinCEN asks certain crypto businesses to comply with anti-money laundering and know-your-customer regulations.

• Internal Revenue Service (IRS): The IRS is responsible for ensuring that businesses and individuals in the United States uphold laws relating to crypto taxes.

Crypto Legislation and Laws in the US 

The rules and laws surrounding cryptocurrency are still being developed in the United States. Current securities, commodities, and financial regulations shape most crypto legislation. However, as cryptocurrencies become more popular, new rules are being introduced that are specific to crypto-related issues.

• Current Securities Laws and The Token Taxonomy Act of 2021: The Token Taxonomy Act was proposed in 2021 and is not yet passed. It will update the Securities Act of 1933 and the Securities Exchange Act of 1934 if passed. The Token Taxonomy Act includes special notes about crypto, like excluding digital tokens from the definition of securities. The Act also touches on digital currency taxation rules, noting that gross gains less than $600 would not be taxable.

Currently, the Securities Act of 1933 and the Securities Exchange of 1934 apply to cryptocurrencies within the US. Both acts mention that cryptocurrencies could be classified as securities, which means qualifying crypto coins must be registered.

• Taxation: The IRS considers cryptocurrencies similar to property in tax instead of considering cryptocurrency a currency. What this means for crypto holders is that crypto transactions, like buying, selling, and mining, are all subject to taxation. In America, crypto holders must report digital currency transactions and pay taxes on capital gains or losses.
• Bank Secretary Act (BSA) and Anti-Money Laundering (AML): All crypto businesses, including wallet providers and crypto exchanges, must comply with the Bank Secretary Act and FinCEN regulations. With this law in mind, companies must implement anti-money laundering and know-your-customer procedures to combat bad actors and meet regulatory requirements.
• Digital Commodity Exchange Act (DCEA): This law has not yet been passed and is currently sitting with Congress in the US. If passed, the DCEA would create a detailed framework for cryptocurrency exchanges and address problems like market manipulation and investor protection.
• Blockchain Regulatory Certainty Act: This bill has been proposed but has not yet been passed. If passed, the Blockchain Regulatory Certainty Act would provide regulatory certainty for blockchain developers. It would do this by exempting specific blockchain tokens and transactions from securities laws.

With a mix of cryptocurrency laws and regulations firmly in place and other laws that have been proposed but not yet passed, it’s clear that the regulatory landscape in the US is still being developed.