Cryptocurrency Laws and Regulations by State

[Get the latest insights on increasing federal regulation of digital assets including analysis of developing tax implications in our report: Cryptocurrency: From the IRS to the SEC & Beyond.]

What is cryptocurrency?

Digital or virtual currency is an electronic medium of exchange that is not a representation of U.S. or foreign currency. Cryptocurrency is a type of digital currency that utilizes cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain. According to the IRS: “Units of cryptocurrency are generally referred to as coins or tokens. Distributed ledger technology uses independent digital systems to record, share, and synchronize transactions, the details of which are recorded in multiple places at the same time with no central data store or administration functionality.”

Are transactions of cryptocurrency covered by the Bank Secrecy Act and anti-money-laundering laws?

Yes. The Anti-Money Laundering Act of 2020 codifies prior Financial Crimes Enforcement Network (FinCEN) guidance by making all transactions in “value that substitutes for currency” subject to reporting requirements and money transmitter registration; this definition includes digital currency.

Is there federal legislation related to cryptocurrency?

So far, Congress has left the task of addressing issues created by digital assets to regulatory agencies. A Congressional Blockchain Caucus formed in 2016. House and Senate members introduced few bills addressing digital assets until 2018, but interest appears to be growing.

Congress shows growing interest in digital asset issues

What are the cryptocurrency laws by state?

While many states regulate virtual currency under existing money transmitter rules, specific cryptocurrency laws and regulations vary state-by-state.

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