Home Finance How is Cryptocurrency Trading Regulated in the US?

How is Cryptocurrency Trading Regulated in the US?

by Biljana Denic

Every country or state has a different legal status for regulating cryptocurrencies. The government authorities of the US consider crypto assets money transmitters instead of considering them as legal tender. It defines virtual currencies as digital money forms that can be a good source of exchange.

The tax guidance is issued with different parameters related to the virtual currencies. There are plenty of exchange platforms that support people in the US to trade their digital money.

Go url is one such platform where one can start trading their cryptocurrencies with ease. You can create your account, add funds and start making transactions from one account to another.

In the following write-up, we will discuss how cryptocurrency trading is regulated in the United States. If you are a resident of the US, you should know about all the laws that are set by the government authorities currently. Let us explore more.

Regulations of Crypto Exchanges

Source: scholarlyoa.com

The use of various exchange platforms in the United States is quite legal, and it comes under the BSA. It is necessary to own a license to run such an exchange platform. The license should belong to FINCEN. It is mandatory to submit all the records as well as reports to the government authorities of the country.

The security law was posted by the SEC of the US. Digital wallets are relatively secure to use. People can rely on these services in terms of privacy and security. The government has approved Ethereum as well as BTC as commodities, and it is possible to trade other virtual currencies publicly.

The exchange platforms must provide information regarding crypto transactions. In 2021, the regulations are relatively the same as it was implemented before as per the BSA.

Future Regulations on Digital Currencies

The US government authorities are concerned about the criminal activities happening due to cryptocurrencies. Therefore, there is an immediate need to modify the laws to avoid such activities. A working group of FSOC has explored the entire marketplace of crypto assets. In 2020, as per the new requirement of data collection, people are responsible for handling crypto assets, exchanges, payments, and much more.

In case of suspicious activities, the exchange needs to inform the authorities and follow all the rules. The main aim is to protect consumer data and provide security to them. The federal approach needs to be slow. Due to the US dollar destabilizing effect, cryptocurrencies are kept under regulations because they can affect the fiat money in banks.

The Scope of Illegal Activities that can Happen with Digital Currency

1. Money Laundering

Source: techrepublic.com

There is a scope of money laundering that can happen in the BTC network. There are plenty of methods that can make your Bitcoins anonymous, and hence, they can obscure the forensic trading history. The government finds it challenging to detect the laundering activities happening in the country.

If anyone wants to know about these crimes, it is necessary to get help from other international companies. Due to the inherent nature of digital currencies, people transfer BTC from one place to another in the world. Therefore, it is hard to control illegal transactions, and they cannot be removed from the regulations.

Darkcoin is a massive laundering service that helps users to trade Bitcoins repeatedly. There are plenty of VC forms through which one can make illegal transactions. There is a complete scope of various crimes like investment fraud, narcotics trafficking, identity theft, hacking, etc.

2. Security Fraud

Many security crimes in previous years were committed by using the BTC. The Securities and Exchange Commission reported them. Due to the same reason, various anti-gambling regulations were set. Many investors were involved in the Ponzi scheme in 2013.

Hence, it amounted to many Bitcoins, and all the investments were sold. Many people agreed that BTC cannot be considered money. Hence it cannot be considered as securities as well. But the magistrate judge explained that it is money and it can be used as securities. Anyone can buy or sell or pay for buying another commodity.

But there is a massive drawback that it is not accepted as currency in various countries. There is no scope of getting exchanged in return for the US dollar and other currencies of different countries. But still, many people like to invest their money in it to gain massive profits. Various regulations are getting set related to illegal gambling and security fraud.

3. Customer Warnings

Source: cnbc.com

Various consumers got the warning of VC in 2014 by CFPB (Consumer Financial Protection Bureau). Many people were involved in the warning, i.e., hackers, or scammers, who were unable to make chargebacks. All the warned users know that VC is volatile and is associated with unproven technology and criminal organizations.

The use of cryptocurrencies by anonymous users leads to theft and severe fraud. In this way, anyone can lose his funds, and there is no safety of deposits in any way. Everyone knows that VC is at a high risk of money laundering, market manipulation, and different illegal transactions.

4. Online Gambling

If we talk about the current legal status of the use of virtual currency in digital gambling in the US, then it is not decided yet. In previous years, many individuals have started poker companies. But a law was enacted in 2006, i.e., UIGEA. The poker games were continued till 2011.

Later, it is decided not to restrict internet-based gambling, and one can accept the funds. If anyone wants to exchange the BTC in return for fiat money, it should be a financial exchange. Now, gambling websites are accepting payments through different modes.

Final Thoughts

Like other countries, the US has its regulations regarding trading in digital currencies. As a citizen of the United States, it is necessary to understand the laws. You should step into this field only when you have enough knowledge. Make sure that you know the complete history and how it is going currently. In many states, it is legal to trade Bitcoins or other virtual currencies.

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