The global cryptocurrency market is evolving and forcing US regulators to improve tracking and delineate restrictions.
Some countries have recognized cryptocurrencies as the official means of payment for internal settlements. Large companies accept payments in cryptocurrency for goods and services. Consequently, the market capitalization of crypto is growing, and trends in the crypto market are becoming more predictable and aligned with major market trends. In some countries, the regulation of digital currencies has been delineated, and central banks are developing digital currencies
, but the US government is still looking for a consistent solution for cryptocurrency regulation.
For several years, the US Internal Revenue Service (IRS) has been telling Americans they need to declare their profits from cryptocurrency transactions. Controlling this market has been its top priority in recent times and taxes have become mandatory. On November 11, US President Joe Biden signed a law
that introduces rules for cryptocurrency brokers and operators saying they must report all transactions in digital assets worth more than $10,000 to the tax service. The US authorities expect that taxes on cryptocurrency transactions will bring the federal budget about $28 billion.
In 2021, US law enforcement officials confiscated about $1.2 billion worth of crime-related cryptocurrency. It’s already difficult for criminals to get stolen money from crypto networks without being arrested and thrown in jail. Transparent and changeless blockchain payments and funds transfers are more accountable than opaque traditional payment networks. Investigators are using advanced blockchain forensics to track stolen funds and solve crimes.
Over the past year, many traditional investors have been showing an active interest in the cryptocurrency market. ETFs are starting to emerge. So far, these ETFs are based not on the bitcoins, but on their futures. Still, this situation is luring in an increasing number of investors.
On October 19
, the New York Stock Exchange (NYSE) began trading the first US exchange-traded fund (ETF) based on Chicago Mercantile Exchange (CME Group) bitcoin futures. The Bitcoin Strategy ETF from ProShares received approval from the US Securities and Exchange Commission (SEC). Before this, the regulator rejected all applications to launch exchange-traded funds based on cryptocurrency. Various companies, including ARK Investment, Fidelity Investment, VanEck, One River, and others, have been trying to get SEC approval to launch a bitcoin ETF since 2013.
According to Coin.dance
, the United States controls 22.6% of all bitcoins, but regulators in 50 states have different views on crypto legislation. Even at the federal level, instead of clear unambiguous regulation, the situation is a constantly changing patchwork of poorly agreed-upon definitions
, laws, and regulations. The SEC generally treats cryptocurrencies as securities, while the CFTC calls bitcoins a commodity and the Treasury Department sees them as a currency.
There are both conservative regulators at the state level and ambitious believers in the blockchain and crypto industry
The Digital Assets Act, passed in Wyoming in 2019, made the state a hub for cryptocurrency investors. Wyoming is actively passing laws to support organizations operating in the field of digital currency.
This year, in early June, Texas governor Greg Abbott
also signed a bill that creates a "master plan" to expand the state’s blockchain industry, making it the second state after Wyoming to accept cryptocurrency in its Unified Commercial Code for commercial transactions. In October, Miami Mayor Francis Suarez
announced a plan to make the city a crypto-capital of the US and start paying civil servants in bitcoin.
While state-level initiatives show the potential for blockchain and cryptocurrencies, these local steps are not enough. Only regulation at the federal level will create legal certainty.
A similar problem currently exists in the European Union, where the policies differ from country to country. EU-wide legislation is required to make cryptocurrency, fintech experiments, and blockchain transparent and understandable. At the same time, the Chinese government
has chosen a different path and become the leader of the blockchain industry while prohibiting cryptocurrencies. The legislation now being drafted will become the blueprint for the future digital economy.
More and more, cryptocurrencies are changing the banking and financial sectors. Governments are exploring the possibility of incorporating blockchain into the financial system and testing national digital currencies that could eventually replace traditional money. The delay and postponement of the adoption of general laws are associated with insufficient knowledge of blockchain technology. However, the current unclear and inconsistent regulation is seriously hampering the development of blockchain infrastructure.