The present state of cryptocurrency regulations is opaque and constantly changing. Black investors need to understand the existing cryptocurrency law and stay alert for the changes that may occur in the future. Keep reading to discover more.
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What Is Cryptocurrency Regulations
Cryptocurrency regulations are procedural and legal frameworks governments put in place to shape different aspects of digital assets. Crypto regulations across jurisdictions can include comprehensive rules designed to support blockchain users and total bans on the use and trading of cryptocurrency.
Crypto regulations can address how digital currencies are created, sold, bought, and traded. Government agencies and lawmakers can also direct how cryptocurrencies integrate with existing financial systems. To learn more about what cryptocurrency regulations are all about, check Amazon. You’ll find many books that explain it in more detail.
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How Is Cryptocurrency Regulated in the United States
The cryptocurrency regulations in the United States aren’t clearly defined, and they change constantly. Different federal bodies treat cryptocurrencies according to their assessment of cryptocurrency’s characteristics.
The Commodity Futures Trading Commission (CFTC), the Internal Revenue Service, and the Securities and Exchange Commission (SEC) each have their interpretations of crypto.
Below are the interpretations of the three agencies:
Commodity Futures Trading Commission (CFTC)
The Commodity Features Trading Commission believes that cryptos are commodities akin to gold or oil. They define commodities as assets that have the potential to support feature contracts. CFTC has instigated enforcement actions against Bitcoin exchange features that aren’t registered.
Securities and Exchange Commission (SEC)
The Securities and Exchange Commission wants to classify digital currencies as assets. The agency cares about investors’ well-being and protection. Owing to this, the agency demands that all offerings that qualify as “investment contracts” be duly and formerly registered.
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Here are a few books on Amazon that explain more about what it means for a virtual currency to be classified as an asset. You can get one or two to learn about it.
In 2023, the SEC is taking drastic actions to regulate cryptocurrencies. Recently, SEC filed a major lawsuit against Coinbase for alleged unregistered securities.
Internal Revenue Service
The Internal Revenue Service (IRS) classifies digital assets as digital assets as property. Grouping digital assets this way implies that all sales, trade, and purchase using crypto is potentially taxable. The IRS started treating cryptocurrency assets as property in 2014.
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Risks of Regulating Cryptocurrencies
Many people in the crypto industry advocate for increased cryptocurrency regulations. Despite having many advantages, regulating the cryptocurrency industry has risks and drawbacks. Below are the key risks and disadvantages:
- Market access restrictions: Strictly regulations can cause some investors to have limited access to cryptos and other virtual assets.
- Jurisdictional enforcement issues: If all government agencies and lawmaking authorities set their own cryptocurrency regulations and laws, enforcing them can become challenging and extremely complex.
- Suppress innovations: Strict regulations and compliance requirements can hinder or slow the pace of blockchain innovations.
Cryptocurrency regulations are great. They can boost investors’ protection, encourage mass acceptance, and stop illegal activities. However, what isn’t great about it’s the complex policies and regulatory clarity.
If you’re interested in learning worldwide regulations and laws for cryptocurrency, check on Amazon. You’ll find many books that have covered the regulations for various countries in detail.
People Also Read: How to Analyze Crypto Market Trends: 5 Helpful Insights for Black Investors
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