Newest talks on crypto regulation | NextBerater with TIME

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One of the basic principles of cryptocurrency is that it is decentralized and unregulated. But the U.S. government isn’t too concerned about the founding principles of crypto.

SEC Chairman Gary Gensler spoke at the Aspen Security Forum on Tuesday, highlighting his view of the SEC’s role in regulating cryptocurrencies. Gensler called the current crypto landscape the “Wild West”.

In fact, cryptocurrency regulation has been a common concern for US lawmakers and government agencies lately. Just this week lawmakers discussed the proposed $ 1 trillion crypto regulation in the Senate Infrastructure Bill, and Security and Exchange Commission chairman Gary Gensler spoke on the SEC’s role in regulating digital assets.

When it comes to the new US cryptocurrency regulation, a few key issues have emerged: stopping cryptocurrency crime and tax evasion, stablecoin regulation, and the potential for investment vehicles like crypto ETFs and other funds.

For many crypto enthusiasts, the decentralized nature of digital currencies – which, unlike traditional currencies, are not supported by any institution or government agency – is a big draw. However, regulatory guidance can help protect investors. “As much as I like decentralization and the lack of government” [involvement], I’m glad you are careful because unfortunately there are a lot of scams in cryptocurrencies, “says Kiana Danial, author of” Cryptocurrency Investing for Dummies “.

Here’s a round-up of the suggestions we’ve seen so far and how they could affect cryptocurrency investors in the future:

Cryptocurrency crime and tax evasion

Regulation of cryptocurrencies is included in a provision of the $ 1 trillion bipartisan infrastructure bill going through Congress this week.

The provision would expand the definition of a brokerage business to include companies that facilitate trading in digital assets – such as cryptocurrency exchanges. The change would mean increased responsibility for tax reporting to help the IRS prosecute crypto tax evasion. Some lawmakers and industry groups argue that the language of the draft is too broad, according to Washington Post reports.

As Congress prepares to vote on the bill, SEC Chairman Gensler spoke on Tuesday about the need to tighten regulation and prevent further ransomware attacks, as they shut down the Colonial Pipeline in May. The pipeline attack was one of several high profile cases of hackers seeking bitcoin ransom.

While Gensler did not comment exactly on how the SEC intended to help stop these crimes, he said the agency would continue to wield the full extent of its power.

“[The SEC] will continue to get our authorities as far as they go, ”said Gensler during a performance at the Aspen Security Forum in Colorado.

A recent Treasury Department report shared the same concerns as Gensler, saying that cryptocurrency “poses a significant identification problem by facilitating illegal activities, including tax evasion.”

[READ MORE]: Cryptocurrency crime is booming. How to invest safely

What investors should know

According to the bill contained in the Infrastructure Act, companies that enable crypto trading would have to report tax information about these trades to the IRS from the 2024 tax season (just like brokers for traditional investments like stocks).

“The bill is generally investor-friendly because it makes it easier for investors to comply with crypto taxes,” said Shehan Chandrasekera, CPA, head of tax strategy at, a crypto tax software company. “This is because when the law is passed, the exchanges will have to issue 1099-B tax forms with cost base information to investors.”

This means that the exchange would provide a record of the taxable events on the platform, e.g. B. How much your Bitcoin was worth when you bought it and when you sold it back in US dollars. Today only a few exchanges report this information.

“This will significantly reduce the hassle of filing crypto tax returns,” says Chandrasekera.

It is already important to keep your own records of capital gains or losses on your crypto trades, which you should report on your federal tax returns. But this regulation would make it even more important as it would be easier for the IRS to find crypto-related tax evasion cases.

Stablecoin regulation

Gensler also hinted on Tuesday that increased stablecoin regulation could help with the cryptocurrency crime problem as “most of what is happening” has happened [on cryptocurrency exchanges and platforms] is cryptocurrency to cryptocurrency. ”

Gensler says that by circumventing US dollar involvement in direct crypto-to-crypto deals, malicious actors may be better able to evade public policy measures and other sanctions aimed at or preventing money laundering Ensure tax compliance.

Pro tip

Aside from state regulation, many country-specific cryptocurrency laws have been passed. Do you know what regulations are in your State.

Stablecoins are a type of cryptocurrency that is tied to an existing currency such as USDT (Tether). USDT is tied to the price of the US dollar, so its value is constant at 1 USD. And the SEC isn’t the only agency showing interest.

Federal Reserve Chairman Jerome Powell also spoke about regulation of stablecoins recently when he testified before the U.S. House of Representatives Financial Services Committee earlier this month. Powell said if stablecoins are to be a “significant” part of the payments universe, “we need an adequate regulatory framework, which we honestly don’t have.”

Treasury Secretary Janet Yellen recently reiterated this point of view and coordinated a meeting with the President’s Working Group on Financial Markets to discuss “the rapid growth of stablecoins, the potential use of stablecoins as a means of payment and potential end-user risks to the financial system,” and national security “, It says in a session reading.

What investors should know

Almost three-quarters of trading on all crypto trading platforms took place between a stablecoin and another token in July, Gensler said. While it is still unclear what regulatory action on stablecoins would look like, any regulation could affect investors who hold or use stablecoins as part of their strategy.

Crypto-to-crypto trades often have lower fees on many exchanges than buying crypto directly on dollar-to-cryptocurrency transactions, and the low price volatility of stablecoins makes them a potentially better option for purchases than cash anytime to remit. But for investors, they’re not as big a store of value as more volatile cryptos like Bitcoin. If you are investing in crypto looking for long-term growth, experts recommend sticking with more established coins like Bitcoin or Ethereum.

In anticipation of upcoming guidelines, you should also ensure that you choose a cryptocurrency exchange that complies with evolving federal and state regulators in the United States. This includes many established, high-volume US exchanges such as Coinbase and Gemini.

“I currently only buy my cryptocurrency assets from regulated brokers because we have the luxury of doing so. In other countries they don’t have it, of course, but we have it, ”says Danial.

Cryptocurrency ETFs

While the government is considering how to make cryptocurrency more difficult to use for illegal activities and tax evasion, there is still no way for Americans to buy into crypto using more traditional investment accounts like those at Fidelity or Vanguard.

The SEC has yet to approve an exchange-traded fund (ETF) – despite several proposed funds from various institutions and exchanges – but Gensler announced Tuesday that it could come.

“We do it in the stock market, we do it in the bond markets, people might want it here,” said Gensler. He admits that there have already been SEC filings for ETFs, “but I assume that we will have some new ones under the so-called Investment Companies Act – and in combination with other federal laws, the law offers considerable investor protection”, he says.

The Investing Companies Act requires companies, including mutual funds, to “regularly” disclose information about their finances and investments, according to the SEC.

Until an ETF is approved, “there isn’t really a way to buy a security that accurately tracks the price of a particular cryptocurrency,” says Jeremy Schneider, the Personal Finance Club’s personal finance expert. That said, the only way for investors to really do this is to buy coins directly on an exchange.

While there has been some confusion as to whether cryptocurrencies are securities (and subject to SEC regulation), Gensler made it clear that every Initial Coin Offering (ICO) he has seen is a security: “Generally, people expect this Buy tokens, profits, and there is a small group of entrepreneurs and technologists who stand up and maintain the projects … I believe we now have a crypto market where many tokens can be unregistered securities with no disclosure or market oversight required. “

However, Gensler reiterated that the SEC has jurisdiction and “our federal securities laws apply”.

What investors should know

Cryptocurrency ETFs are not yet available in the US, but they can offer investors a way to get into cryptocurrency without having to buy directly on an exchange in the future.

If you’re into crypto, these funds can help you diversify your holdings across different coins, like a traditional ETF or index fund. But they’re still just as speculative as any crypto investment; If you are waiting for a Bitcoin ETF because you don’t want to take the risk, then you should consider whether crypto belongs in your portfolio at all.

Meanwhile, Gensler’s stance that every ICO is a security could mean that investors should turn to the SEC for protection as regulation becomes more specific.