Currently, there is no special federal law in the United States that specifically addresses cryptocurrency. Individual regulations exist at the state level, but legal regulation is fragmented from state to state — there is no unified federal policy yet.
However, authorized bodies have created very detailed instructions and explanations. In addition, in general, federal legislation does not hinder the development of the crypto industry and is not going to prohibit cryptocurrency.
Thus, according to clarifications from the US Internal Revenue Service (IRS), virtual currency is a digital representation of value, different from the representation of the US dollar or foreign currency (“fiat currency”), which functions as a unit of account, a store of value, and a medium of exchange. Cryptocurrency is classified as virtual currency.
According to Section 4 of IRS Notice 2014-21, 2014-16 I.R.B. 938, virtual currency (including cryptocurrency) is recognized as property (i.e. assets) for tax purposes. That is, legal regulation of cryptocurrency for tax purposes appeared back in 2014. Today, according to the IRS clarifications, almost any cryptocurrency transactions are permitted in the States. The only exceptions are those transactions that directly violate the laws (for example, fraud, etc.).
Permitted cryptocurrency transactions include:
- Receiving cryptocurrency for work/services.
- Paying for work/services with cryptocurrency.
- Exchanging cryptocurrency for other property (including real estate).
- Exchanging property (including real estate) for cryptocurrency.
- Making a donation (charitable contribution) in cryptocurrency.
These transactions are permitted for both individuals and legal entities (companies, charities, etc.).
