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How Cryptocurrencies Are Actually Regulated

How Cryptocurrencies Are Actually Regulated
Breaking News / Cryptocoins
Knowing how cryptocurrencies are taxed and regulated can be confusing. Here are a few frequently asked questions to help clear up some confusion. Is cryptocurrency treated as a currency for tax purposes? In a simple answer, no it is not. This is because cryptocurrency is treated as property, meaning the general tax principles that are applicable to property transactions will apply to cryptocurrencies. Will the IRS be able to find out if I had taxable gains from cryptocurrency investments? Yes. A taxpayer that is failing to maintain adequate records faces serious consequences. They can impose penalties for negligence or fraud, or require the taxpayer to use an IRS prescribed method to determine their income. It is crucial that any taxpayer that has gains from cryptocurrencies, must be prepared to report them on their individual income tax return. Is the cryptocurrency industry being regulated by the Securities and Exchange Commission? The chairman of the SEC, Jay Clayton made it clear that they have interests and responsibilities when it comes to cryptocurrencies. They did however express caution for those offering ICO’s, saying that they would be subject to securities laws. Some of the coins that are for sale are also subject to SEC regulation, and some require a license to be able to sell them. Without the appropriate license they could violate federal securities laws. The SEC has not formally said that cryptocurrencies are securities making them subject to securities laws; however, they have taken the lead in prosecuting related cases, appearing that they are in fact heading in that direction. Are cryptocurrencies subject to Foreign Bank Account Reporting Rules? Gavel Standing in Briefcase With Scale No, they are not. When you invest in cryptocurrencies, the tax payer might find it more difficult to determine if they own other accounts for FBAR reporting purposes. The regulations state that bonds, notes and stocks of foreign issuers held by a reporting person are not financial accounts; however, other financial arrangements are not as clear. Can cryptocurrencies be purchased with retirement funds? Yes, they can. The Internal Revenue Code does not describe what a retirement account can invest in, only what it cannot. Image Source: Pixabay Sponsored by Iconiq Lab ICO Banner

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