The relationship between cryptocurrency and people in the USA is complex, governed by both federal and state regulations, with a strong emphasis on taxation, investor protection, and anti-money laundering efforts. For US citizens, the main points regarding cryptocurrency involve various tax implications, federal regulations, state regulations, and the future of cryptocurrency regulation.
The Internal Revenue Service (IRS) treats cryptocurrency as property instead of currency. This means that almost all transactions involving crypto are considered taxable events. These include selling crypto for US dollars, trading one crypto for another, and using crypto for purchases. When a person sells or trades crypto at a profit, they realize a capital gain. If the crypto was held for a year or less, the gain is taxed at the individual’s ordinary income tax rate. If held for more than a year, the gain is taxed at a lower long-term capital gains rate. Additionally, crypto received as payment for services is taxed as ordinary income. Taxpayers must report all crypto transactions using Form 8949 and other relevant schedules. Starting in 2025, brokers and exchanges will issue Form 1099-DA to assist with reporting.
Multiple federal agencies oversee different parts of the crypto market. The Securities and Exchange Commission (SEC) regulates cryptocurrencies it views as securities, focusing on protecting investors from fraud and regulating Initial Coin Offerings (ICOs). The Commodity Futures Trading Commission (CFTC) classifies assets like Bitcoin and Ethereum as commodities and oversees derivatives markets for these assets. The Financial Crimes Enforcement Network (FinCEN) oversees anti-money laundering and customer verification rules, requiring crypto exchanges to register and comply with regulations.
At the state level, regulations can vary widely. Many states have money transmission laws that require crypto businesses to obtain licenses. Some states have also introduced pro-crypto laws, such as allowing residents to pay taxes using crypto.
The future of cryptocurrency regulation in the US seems to be moving toward more clarity after years of fragmentation. Recent legislative efforts, such as the GENIUS Act, which regulates stablecoins, and the CLARITY Act, which aims to define the treatment of digital assets, indicate a move toward a more unified federal framework. There is a current policy preventing the federal government from developing a Central Bank Digital Currency (CBDC) for public use without congressional approval, allowing the private sector to lead digital payment innovation.
Looking ahead, the future of crypto in the USA is rapidly changing and shifting from a time of regulatory ambiguity to one of stronger federal oversight. The main focus is moving toward formal laws instead of relying on enforcement. The biggest change involves an effort to resolve the jurisdictional disputes among regulatory bodies by clearly defining different types of digital assets. With stablecoin legislation, the federal framework provides standards for payment stablecoins and outlines requirements for issuers, promoting their use by major financial institutions.
Legislation like the CLARITY Act aims to clarify the differences between commodities and securities, granting the CFTC oversight for certain digital assets while allowing the SEC to regulate those that clearly qualify as securities. This regulatory clarity is accelerating the acceptance of crypto within the traditional financial system.
Furthermore, the successful introduction of Spot Bitcoin and Ethereum ETFs has made crypto more accessible to investors. The future is also expected to involve tokenizing traditional assets on blockchain platforms, using regulated stablecoins for transactions. Banking regulators are offering clearer guidance to make it easier for banks to provide services related to digital assets.
In summary, the regulation of cryptocurrency in the USA is formalizing, moving toward a structured system. Stablecoins will be regulated for payment purposes, while core assets like Bitcoin will be treated as commodities. This approach aims to establish the US as a leader in blockchain innovation while ensuring consumer protection and financial stability.
