Senate Majority Leader Chuck Schumer (D-NY) spoke on Capitol Hill on Tuesday, Aug. 3, as the Senate looks to pass a $1 trillion infrastructure bill that includes provisions on cryptocurrency regulation.
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One of the founding principles of cryptocurrency is that it’s decentralized & unregulated. But the U.S. government isn’t too worried about crypto’s founding principles.

SEC chair Gary Gensler spoke at the Aspen Security Forum Tuesday, highlighting his view of the SEC’s role in cryptocurrency regulation. Gensler called the current crypto lớn landscape the ‘Wild West’.

In fact, cryptocurrency regulation has been a frequent point of interest lately for U.S. lawmakers và government agencies. Just this week, the $1 trillion infrastructure bill which includes provisions for cryplớn regulation passed the Senate, và Security & Exchange Commission Chair Gary Gensler talked about the SEC’s role in regulating digital assets.

A few key themes have emerged on the subject of new U.S. cryptocurrency regulation: stopping cryptocurrency crime and tax evasion, stablecoin regulation, & the potential for investment vehicles lượt thích crypkhổng lồ ETFs and other funds.

For many cryplớn enthusiasts, the decentralized nature of digital currencies — which, unlượt thích traditional currencies, aren’t backed by any institution or government authority — is a big draw. But regulatory guidance can help protect investors. “As much as I like the decentralization and the lachồng of government , I am glad that they are paying attention because unfortunately with cryptocurrency, there are a lot of scams,” says Kiana Danial, author of “Cryptocurrency Investing for Dummies.”
Here’s a rundown of the proposals we’ve seen so far, và how they may affect cryptocurrency investors in the future:

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Cryptocurrency Crime & Tax Evasion

Cryptocurrency regulation is tucked inkhổng lồ a provision of the $1 trillion bipartisan infrastructure bill moving through Congress.

The provision would exp& the definition of a brokerage to include companies that facilitate digital asset trades — like cryptocurrency exchanges. The change would mean increased tax reporting responsibility to lớn help the IRS trachồng cryplớn tax evasion. Some lawmakers và industry groups argue that the language of the draft is too broad, according khổng lồ reporting by the Washington Post.

Additionally, SEC Chairman Gensler spoke recently about a need khổng lồ increase regulation & help prevent more ransomware attacks, like the one that shut down the Colonial Pipeline baông chồng in May. The pipeline attack was one of a number of high protệp tin instances of hackers seeking Bitcoin ransoms.

While Gensler didn’t phản hồi on exactly how the SEC planned lớn help stop these crimes, he did say that the agency would continue khổng lồ exercise the full extent of its power.

will continue to take our authorities as far as they go,” Gensler said during an appearance at the Aspen Security Forum in Colorado.
A recent U.S. treasury report voiced the same concerns as Gensler, saying cryptocurrency “poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”

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What Investors Should Know

Under the proposed law included in the infrastructure bill, companies that facilitate crypto trades would be required to report tax information about those trades lớn the IRS (just as brokers of traditional investments like stocks do) starting in the 2024 tax season.

“The bill is generally investor-friendly because it makes crypto lớn tax compliance easier for investors,” says Shehan Chandrasekera, CPA, head of tax strategy at, a crypkhổng lồ tax software company. “This is because if the bill passes, exchanges will have lớn issue 1099-B tax forms with cost basis information lớn investors.”

That means the exchange would provide a record of taxable events on the platsize, lượt thích how much your Bitcoin was worth when you bought it và when you sell it baông chồng inlớn U.S. dollars. Today, only some exchanges report this info.

“This will significantly reduce the crypto tax filing burden,” Chandrasekera says.

It’s already important khổng lồ keep your own records of any 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 essential, since the IRS would more easily be able to lớn find any cases of tax evasion related khổng lồ cryplớn.

Stablecoin Regulation

Gensler also hinted Tuesday that increased stablecoin regulation could help with the cryptocurrency crime problem, as “the majority of what happens is cryptocurrency lớn cryptocurrency.”

Gensler says that by bypassing the involvement of U.S. dollars in direct crypto-to-crypto trades, bad actors may be more able to lớn evade public policy measures and other sanctions aimed at preventing money laundering or ensuring tax compliance.

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Pro Tip

Apart from federal regulation, there have been many state-specific cryptocurrency legislations passed. Know what regulations apply in your state.

Stablecoins are a type of cryptocurrency pegged khổng lồ an existing currency, like USDT (Tether). USDT is tied to the price of the U.S. dollar, so its value is constantly $1. And the SEC isn’t the only agency that’s taken interest.

Federal Reserve Chairman Jerome Powell has spoken about stablecoin regulation recently, too, while testifying before the U.S. House Committee on Financial Services earlier this month. Powell said that if stablecoins are going to be a “significant” part of the payments universe, “we need an appropriate regulatory framework, which we frankly don’t have sầu.”

Treasury Secretary Janet Yellen echoed that senhawacorp.vnnt recently, coordinating a meeting with the President’s Working Group on Financial Markets lớn discuss “the rapid growth of stablecoins, potential uses of stablecoins as a means of payment, and potential risks to lớn end-users, the financial system, and national security,” according khổng lồ a meeting readout.

What Investors Should Know

Nearly three-quarters of trading on all crypto lớn trading platforms occurred between a stablecoin và some other token in July, Gensler said. While it’s unclear yet what any regulatory action on stablecoins would look like, any regulation could impact investors who hold or use stablecoins as part of their strategy.

Crypto-to-crypto trades often incur lower fees on many exchanges than buying crypto outright in U.S. dollar-to-cryptocurrency transactions, & stablecoins’ low price volatility makes them a potentially better option for purchases than transferring cash each But for investors, they’re not as great a store of value as more volatile cryptos lượt thích Bitcoin. If you’re investing in cryplớn looking for long-term growth, experts recommover sticking with more established coins like Bitcoin or Ethereum.

In anticipation of any coming guidance, you should also make sure to lớn choose a cryptocurrency exchange that maintains compliance with evolving federal và state regulators in the United States. This includes many established, high-volume U.S.-based exchanges, like Coinbase and Gemini.

“I only purchase my cryptocurrency assets from regulated brokers at this point, because we have the luxury of doing so. Of course in other countries they don’t have it, but we vì,” says Danial.

Cryptocurrency ETFs

While the government considers how to make it harder to use cryptocurrency for illicit activities và tax evasion, there is still no way for Americans to lớn buy inlớn crypkhổng lồ using more traditional investment accounts like those at a Fidelity or a Vanguard.

The SEC has yet khổng lồ approve sầu a cryptocurrency ETF (exchange-traded fund) — despite several proposed funds from different institutions & exchanges — but Gensler revealed on Tuesday that it may be coming.

“We do it in the equity market, we vày it in the bond markets, people might want it here,” Gensler said. While acknowledging there have sầu already been SEC filings for ETFs, “I anticipate we’ll have some new ones under what’s called the Investment Companies Act — & when combined with other federal laws, the law provides significant investor protections,” he says.

The Investing Companies Act requires companies, including mutual funds, lớn discthua kém information about their finances and investments on a “regular basis,” according to lớn the SEC.

Until an ETF gets approved, “there’s not really a way to buy a security that closely tracks the price of a specific cryptocurrency,” says Jeremy Schneider, the personal finance expert behind Personal Finance Club. That means the only way for investors to really bởi that is to lớn buy coins directly from an exchange.

While there has been some confusion about whether cryptocurrencies are securities (& under SEC regulation), Gensler made clear that every initial coin offering (ICO) he has seen is a security: “Generally, folks buying these tokens are anticipating profits, and there’s a small group of entrepreneurs và technologists standing up và nurturing the projects … I believe we have a crypto lớn market now where many tokens may be unregistered securities, without required disclosures or market oversight.”

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

What Investors Should Know

Cryptocurrency ETFs are not yet available in the U.S., but may offer a way for investors khổng lồ get inlớn cryptocurrency without having to lớn buy directly from an exchange in the future.

If you’re interested in crypkhổng lồ, these funds could help you diversify your holdings across different coins, lượt thích a conventional ETF or index fund. But they’re still just as speculative as any cryplớn investment; if you’re waiting for a Bitcoin ETF because you’re unwilling to take on the risk, you may want to reconsider whether crypto lớn belongs in your portfolio at all.

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In the, Gensler’s stance that every ICO is a security could mean investors should look to the SEC for protections as regulation becomes more concrete.