In the United States, cryptocurrencies have been the focus of much attention by both Federal and state governments. At the Federal level, most of the focus has been at the administrative and agency level, including the Securities and Exchange Commission (the “SEC”), the Commodity Futures Trading Commission (the “CFTC”), the Federal Trade Commission and the Department of the Treasury, through the Internal Revenue Service (the “IRS”), the Office of the Comptroller of the Currency (the “OCC”) and the Financial Crimes Enforcement Network (“FinCEN”). While there has been significant engagement by these agencies, little formal rulemaking has occurred. Many Federal agencies and policymakers have praised the technology as being an important part of the U.S.’s future infrastructure and have acknowledged the need for the U.S. to maintain a leading role in the development of the technology.
Several state governments have proposed and/or passed laws affecting cryptocurrencies and blockchain technology, with most of the activity taking place in the legislative branch. There have generally been two approaches to regulation at the state level. Some states have tried to promote the technology by passing very favorable regulations exempting cryptocurrencies from state securities laws and/or money transmission statutes. These states hope to leverage investment in the technology to stimulate local economies and improve public services. One example, Wyoming, has been mentioned as a state seeking a broader impact on its economy. In furtherance of this objective, Wyoming passed legislation allowing for the creation of a new type of bank or special purpose depository institution. These crypto-focused banks can act in both a custodial and fiduciary capacity and are meant to allow businesses to hold digital assets safely and legally. The state has been praised for becoming the most crypto-friendly jurisdiction in the country. Another state, Colorado, passed a bipartisan bill exempting cryptocurrencies from state securities regulations. Ohio became the first U.S. state to start accepting taxes in cryptocurrency. Oklahoma introduced a bill authorizing cryptocurrency to be used, offered, sold, exchanged and accepted as an instrument of monetary value within its governmental agencies. On the other hand, Iowa introduced a bill that would prohibit the state and political subdivisions of the state from accepting payment in the form of cryptocurrencies. Authorities in at least 10 other states, like Maryland and Hawaii, have issued warnings about investing in cryptocurrencies. New York, which passed laws once considered restrictive, has eased restrictions for attaining a BitLicense in the hopes of luring back cryptocurrency companies that previously exited the New York market.
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There is no uniform definition of “cryptocurrency,” which is often referred to as “virtual currency,” “digital assets,” “digital tokens,” “cryptoassets” or simply “crypto.” While some jurisdictions have attempted to formulate a detailed definition for the asset class, most have wisely opted for broader, more technology-agnostic definitions. Those taking the latter approach will be better positioned to regulate as and when the technology evolves.