Our Cryptocurrency Attorneys Help You Understand How Cryptocurrency is Regulated
Cryptocurrencies like Bitcoin have become increasingly popular, even among mainstream investors, but the regulatory climate surrounding cryptocurrencies is still evolving. Those involved with cryptocurrency transactions need to understand both the legal requirements imposed on cryptocurrencies as well as the limitations of the legal protections that are in place. Zamansky LLC can provide assistance to individuals and entities that want to ensure compliance with cryptocurrency rules and regulations and can provide help taking action when problems arise. When you need a cryptocurrency law firm with extensive knowledge of financial rules and regulations, we can provide the help you need. Give us a call today to find out more about the assistance we can offer.
Investing in cryptocurrencies and understanding the legal issues surrounding them is a very complicated prospect.- Jacob H. Zamansky
Laws Regulating Cryptocurrencies
In 2013, the Financial Crimes Enforcement Network (FinCEN) published guidance on virtual currencies which created different categories of persons involved with cryptocurrencies who could be subject to obligations under the Bank Secrecy Act.
Administrators and exchangers were classified as money transmitters and are thus subject to regulations found within the Bank Secrecy Act. Exchangers are persons engaged in a business involving the exchange of virtual or real currency, while administrators are engaged in the business of issuing virtual currencies and have the authority to redeem virtual currencies. Users, who are not subject to Bank Secrecy Act obligations, are persons who obtain virtual currency in order to purchase goods or services. Miners, those who mine for bitcoin or other cryptocurrencies, are typically not considered to be either exchangers or administrators.
Administrators and exchangers are subject to a host of regulations related to collecting accountholder information and sharing it with FinCEN. Money transmitters, which are a subset of exchangers who both buy and sell bitcoins, are also subject to special rules including required registration with FinCen, complying with know-your-customer rules related to account verification to prevent money laundering, and filing reports of suspicious activity.
While the Bank Secrecy Act requires compliance and reporting, it is important for investors to note that no cryptocurrency exchanges or virtual wallets are provided with the protections that banks have in the United States. There is no FDIC Insurance coverage for cryptocurrency marketplaces or virtual wallets. If companies go out of business or are hacked and funds are lost, the money may be gone permanently and there are no protections from the U.S. government to guarantee investments.
Investors and those involved in Bitcoin or cryptocurrency exchanges also must understand obligations under U.S. tax law. Bitcoins must be reported as property, and Coinbase has been ordered to turn over information to the IRS connected with Bitcoin transactions valued at $20,000 or more. It is likely that as the regulatory framework surrounding cryptocurrencies develops, coin trading platforms will be subject to similar reporting requirements as domestic and foreign banks that are required to report large transactions.
The Securities and Exchange Commission has also issued recent guidance indicating that Initial Coin Offerings (ICOs) will be subject to federal securities laws.
Get Help From a Cryptocurrency Law Firm Today
Zamansky LLC, a Bitcoin and cryptocurrency law firm can help you understand and comply with laws related to bitcoin and other cryptocurrencies and can explain the limitations of the regulations that provide you with protection when trading Bitcoin or altcoins. To find out how an attorney can help you, give us a call today.