Biden Admin Puts in New Rules to Crack Down on Cryptocurrency

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Cryptocurrency Criminals by Infosec Images is licensed under CC BY 2.0

Cryptocurrency is the new Wild West of financial speculation and a lot of people have gotten rich from it in the past few years.

Others have lost a lot in the past few weeks, as crazy market swings upended their portfolio.

This was caused in part by tweets from Tesla CEO and crypto enthusiast Elon Musk. He sent prices tumbling after commenting on issues he has with Bitcoin and delinking it from Tesla. 

Now, news is also coming down that the federal government will be taxing crypto gains and putting further regulations on the market. 

What does it all mean?

Cryptocurrency Mining, Bitcoin mining stock photo by Crypto360 is licensed under CC BY 2.0

Crypto Crash Coming Up?

It’s obvious that the feds haven’t really been sure about how to respond to crypto, and different departments have put out varying rules. Crypto came out of libertarian thought in many ways: those trying to get out from over-regulation and the games of the Federal Reserve. 

However, without a clear set of rules on how to tax or regulate crypto, the market has been plagued by instability. The Securities and Exchange Commission (SEC) as well as the Commodity Futures Trading Commission (CFTC) are both looking to get more involved, and the good old IRS also wants its slice of the pie. 

On Thursday the Treasury announced that any crypto transactions over $10,000 will have to be reported to the IRS. However it still needs to be decided as well on whether crypto gains are income and which are basically considered as a stock split.

Although exact rates and specific rules have not yet been finalized, but at this point the SEC may be put in charge of cryptocurrency exchanges, and they are working with the CFTC to come up with ideas on crypto. 

At the moment, the SEC is facing off against Ripple (XRP) cryptocurrency to do with whether XRP qualifies as a regulation-required security. 

On the other side, if Chris Brummer becomes head of the CFTC that would be a positive step since he has a lot of experience in crypto and is popular among industry leaders. 

FATF Guidelines

Several months ago, the Financial Action Task Force (FATF) which comprises many different countries and areas put out guidelines on crypto and how to stop it being used for crime, money-laundering and terrorism. 

The importance of China also should not be underestimated, considering it’s a major center of crypto mining and considering its communist government just banned crypto from being used to pay for things and at most banks. 

China still wants to make a digital yuan and is clearly interested in crypto technology, but this step only means more instability coming up for crypto.