The Securities and Exchange Commission (SEC) considers cryptocurrencies to be a security and applies securities regulations to digital wallets broadly
FREMONT, CA: As the transition of cryptocurrencies from speculative investment to stablemate in a diversified portfolio accelerates, governments around the world remain split on how to regulate them. Despite the fact that finding a unified legal strategy at the state level is challenging, the United States continues to make progress in drafting federal-level cryptocurrency legislation.
The Securities and Exchange Commission (SEC) considers cryptocurrencies to be a security and applies securities regulations to digital wallets broadly, affecting both exchanges and investors. Bitcoin and Ethereum are recognized as commodities by the Commodity Futures Trading Commission (CFTC), which also enables other virtual and cryptocurrency derivatives to trade publicly on exchanges that it regulates or supervises. Cryptocurrency is classified as a currency by the US Treasury, and it is treated as digital property by the Internal Revenue Service (IRS).
The Bank Secrecy Act of 1970 (BSA) regulates cryptocurrency exchanges in the United States, and they must register with the Financial Crimes Enforcement Network (FCEN) (FinCEN). They must also comply with anti-money laundering (AML) and counter-terrorist financing (CFT) rules in addition to BSA regulations. As a result, bitcoin exchange service providers must apply for a FinCEN license, execute an AML/CFT and sanctions programme, keep proper records, and file reports with the appropriate authorities.
The US Treasury recognizes the critical need for crypto rules to combat international and domestic illicit activity. To guarantee effective consumer protection and seamless regulatory monitoring, the Justice Department continues to engage with the SEC, CFTC, and other agencies on future cryptocurrency rules. Given the potential destabilizing effect cryptocurrencies may have on the globally dominating US dollar, as well as the impact that private and centrally backed currencies may have, US politicians are still keen to put cryptocurrencies under legislative review.