Crytocurrency FAQs

There is no central regulator of the technology; instead, a regulatory patchwork has emerged at both the state and federal level, and regulators do not necessarily classify the technology consistently. For example, for tax purposes, the IRS currently treats convertible virtual currency as property rather than currency. Thus, taxpayers are taxed on the receipt of such cryptocurrency and recognize a gain or loss on its sale.

The Financial Crimes Enforcement Network (“FinCEN”), a sister bureau of the Department of Treasury, also polices cryptocurrencies. Currently, those who fall under FinCEN’s definition of “exchangers” and “administrators” of cryptocurrency are treated as “money service businesses” subject to a regulatory regime under the Bank Secrecy Act that governs currency reporting and anti-money laundering.

The Securities & Exchange Commission has become increasingly active in the cryptocurrency realm.

The Commodity Futures Trading Commission (“CFTC”) has also played a role in developing the regulatory landscape. The CFTC has taken the position that virtual currencies are commodities for purposes of the Commodity Exchange Act (“CEA”), thus falling within its regulatory purview as well