Jeff Bandman is a former Senior Officer in the US Commodity Futures Trading Commission (CFTC), and he recently shared some occurrences that can be expected regarding future plans to regulate the use digital currencies in the USA. Among the many logistics that are being addressed certain features stand out such as ID checks, revamped tax legislation to reflect them as an asset reporting obligations, and the overall self-regulation of the industry as some of the things we can expect sooner than later.
Bandman informed that the US government has been pursuing this path since 2013 when IRS officials auctioned a substantial amount of Bitcoin that was seized from Silk Road in the dark web after they were shut down. It’s a known practice of the government to auction the physical assets retrieved from criminal operations after the courts and the evidence rooms process them. The more offending materials are avoided such as drugs, but cryptos where an entirely different matter since the US government chose to acknowledge them as something worth of value with this action.
The Reasons for Regulation
Most of these regulations are coming after keeping tabs at the conversions rates of money laundering for most of 2018. While regular FIAT money is still the preferred form of trade, the increase of laundering pursued by “criminals” using digital currencies just this year alone nearly tripled the numbers of last year, especially since some third world countries like Venezuela are issuing their own cryptos to escape economic sanctions issued by the US government. Terrorist organizations are also keeping themselves out of the loop by taking full advantage of the anonymity offered by blockchain transactions. Just in 2018 nearly $100 billion was laundered in Europe alone. On that figure, $4 billion was handled using cryptocurrency.
A New Agency to “Deal Justice”
Among the most feasible courses of action, Bandman announced the creation of an international coalition called “The Financial Action Task Force”, with a large number of countries in the EU, and some Asian nations embracing the organization to deal with the financial problems that have been brought on by cryptocurrencies. Implementing standardized regulations will be a core theme for the agency.
They are also “Fighting Tax Evasion”
Bandman also commented on the fact that the US government has been pursuing a legal way to tax cryptocurrency income since 2014, but the consensus on how to do it by our lawmakers is not quite there yet. The country also has been trying to reach a global solution in this regard, but so far each country has been dealing with this matter on their own terms. Some of them are being reasonably balanced. Others are being incredibly punitive about it. The problems regarding clarity and consistency are still there.
One of the leading examples to watch out for is in France. The country has been looking to impose a 20% tax on the capital gains made from cryptocurrencies. The users of the currency in the European nation are still scratching their heads about how that is going to work given the volatile nature of Bitcoin, the most used crypto in the world. Since many businesses and retails need clearer rulebooks, some products will remain novel to the regulation as they are assimilated as taxable assets. It becomes necessary to have a clear taxation policy to support national industries who deal with cryptos.
Working to Create “Safe Trade Environments”
The trade landscape evolves quickly when it comes to digital currencies. It seems that the USA is taking this particular regard into account and going swiftly about it. This has a lot to do with the fact that the country under their legal terms has a broad definition of what it means to set a security contract as well as an investment one. That’s what the free market entails. Whatever this stance favor or harms the USA, the fact is that other countries have a foot at the door already since their trading definitions are more specific.
Most legislation regulating economic endeavors in the USA excludes cryptocurrencies as we know them. In the country, digital assets need to comply with security laws for the most part with very few exceptions such as Bitcoin and Ethereum given their reputation as truly decentralized digital currencies. Currently, Japan seems to be the only country who has the regulation issues worked out since they simply gave full authority to their financial market regulator to handle cash or spot trading of cryptocurrencies.
No matter what we think about it, it seems that the future of digital currencies relies on what happens with these proposed exchange regulations.