Cryptocurrencies such as Bitcoin are all the rage right now in the world of investment. For those of you who don’t know, cryptocurrency refers to digital money that cuts out the need for a middle-man in transactions. Cryptography is used to control the creation of the currency and also verify the transfer from one person to another. Banks and governments are paying attention, but not everybody understands just how revolutionary this asset really is and the cryptocurrency law surrounding it. It’s gaining a ton of momentum, and the prices of shares have exploded in the past year.
Current Cryptocurrency Laws
Regulating cryptocurrency isn’t exactly easy, but the government is definitely going to try. The issue is that the climate of cryptocurrency can change quickly while legislation moves slowly. The result is that sometimes cryptocurrency law and cryptocurrency regulation isn’t always clear or even updated. For example, any currency entering the New York market needs to acquire a Bitlicense from the state, a process that can can some time before investors are able to have access. Here are a couple of laws that investors should be aware of:
Securities law: The Securities and Exchange Commission (the “SEC”) has regulatory authority over issue or resale of any cryptocurrency that meets the guidelines of an investment contract. Because of this, sometimes initial coin offerings (ICOs) are only made to more established investors.
Tax Law: The IRS has indicated that cryptocurrency will be taxed as capital gains. People who buy and sell cryptocurrency like an investment will be taxed in much the same way as buying and selling stock. For people who to use cryptocurrency as cash, each transaction had the potential to be treated as a gain or loss.
Cryptocurrency is still a murky area of law. If you have questions or would like more information, then you should consult an experience cryptocurrency attorney. LawTrades can put you in touch with someone who can help. Because cryptocurrency laws are changing, be sure to check out our subscription-based service. Our plans give you year-round access to unlimited legal consultations without paying hefty fees or wasting time searching for the best help.