Blockchain & Cryptocurrency Laws and Regulations

Federal and state laws and regulations pertaining to cryptocurrencies occur from within multiple agencies, including, on the Federal level, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Federal Trade Commission and the Department of the Treasury through the IRS, the Office of the Comptroller of the Currency (OCC) and the Financial Crimes Enforcement Network (FinCEN). While these agencies are actively involved, there aren’t a lot of specific rules to be found.

The state laws and regulations regarding blockchain and cryptocurrency vary widely, with most oversight coming from state legislatures. States generally fall into one of two camps – either loosening restrictions to encourage economic activity, or strengthening restrictions and issuing warnings about investing in cryptocurrencies. As evidence of the unresolved nature of cryptocurrencies, there is also not one agreed-upon definition. Cryptocurrencies can be known as digital assets, digital tokens, virtual currency, cryptoassets or simply crypto.

Sales of cryptocurrencies get complicated when one or both parties are unsure if the issuance or resale of any token or other digital asset constitutes a security. This moves into a grayer area and care must be taken to correctly categorize a transaction and handle and record it accordingly.

As Chair Gensler stated at the Aspen Security Forum in August 2021: “It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These products are subject to the securities laws and must work within our securities regime.”

And although the laws and regulations may be slow in coming, the scrutiny of digital assets by state securities regulators during 2021 increased, particularly regarding interest-bearing crypto accounts.

Those getting involved in cryptocurrencies also need to be aware of all the laws and regulations pertaining to money transmission, as it can devolve into perceived money laundering. There are also very specific laws and regulations involving foreign nationals on particular lists, or from particular countries.

The IRS is also very involved and novices need to be aware of the complex set of rules and regulations regarding income and capital gains generated through cryptocurrencies.

For all these reasons and more, a law firm well versed in all aspects of blockchain and cryptocurrency laws and regulations is crucial. One that specializes in this industry and stays up-to-date with the constantly evolving laws and regulations. A firm such as Bull Blockchain Law.

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