Some time ago we posted an article about the NYSE launching a Bitcoin index and thus, in some financial circles, “legitimizing” the cryptocurrency. In the time since, while it’s difficult to say whether or not the index has had any direct effect or not, Bitcoin’s price has risen and it seems to be the subject of more discussion and speculation than ever before.
But with so many changes in how Bitcoin is viewed in America, and so much increased exposure for the cryptocurrency in general, some wonder what the government’s official policy toward it might be. It’s not uncommon to see headlines about other governments banning Bitcoin or passing legislation meant to regulate it or curb its growth. In the U.S. we don’t hear about such things despite the fact that the U.S. has been where a significant portion of Bitcoin growth has occurred.
Examining the legal status of Bitcoin in different parts of the world, one analysis described the U.S. and UK attitude as “laissez faire,” meaning that in both countries Bitcoin is essentially left alone by the government. Indeed, the U.S. government has not officially imposed any restrictions or regulations on the growth and spread of the cryptocurrency, which is actually the case in much of the Western world. However, the same analysis mentioned that some countries have taken small regulatory measures to address money laundering and criminal potential among Bitcoin users, and it’s in this vein that branches of the U.S. government have actually taken some small actions.
For instance, one thorough overview of laws and regulations relating to Bitcoin in the U.S. pointed out that the IRS has had to make a determination on how to handle cryptocurrency. The IRS has determined that Bitcoin should be treated as property rather than currency, and yet reserves the right to tax Bitcoin earned as income. Meanwhile, the Financial Crimes Enforcement Network has been looking for ways to regulate Bitcoin or keep an eye on its users given the potential for it to be used in money laundering or other criminal activity. The Federal Reserve, too, has attempted to track the emergence of Bitcoin vendors and payment system innovations, but it can really only go so far as to regulate operations if a supervised banking organization began distributing Bitcoin.
So for the most part, what we’ve seen in the U.S. in terms of regulation can better be described as interest than action. There are U.S. government organizations that have taken an interest in where and how Bitcoin is being used. However, the actual ability of those organizations to disrupt or interfere with the spread of Bitcoin is currently limited. Thus, while “laissez faire” may be the most appropriate way to describe the U.S. outlook, it doesn’t quite tell the whole story.
But for Bitcoin users, or those considering getting involved with cryptocurrency, it’s still appropriate to act as if it’s completely unregulated in the U.S.