Is Bitcoin legal in the United States? 🧑⚖️
Bitcoiners,
Here are the legal frameworks an American Bitcoin investor should consider to ensure they are interacting with bitcoin legally in 2022:
TLDR; Yes it is legal BUT Bitcoin has only been around for just over a decade so try to keep up to date with new legislation happening on the Federal, State, and City level each tax year.
Bitcoin is such an innovative technology and is growing in adoption faster than lawmakers can make new laws.
I wish there was a one size fits all ruling on Bitcoin for US citizens. The way the laws work in the US is based on tiers:
Federal Legislation
State Legislation
City Legislation
Federal Legislation:
Bitcoin is defined as a commodity.
Three major bodies oversee the legality of Bitcoin on the Federal level.
1. US Securities and Exchange Commission (SEC)
In 2015, the SEC declared bitcoin is not a security.
2. Commodity Futures Trading Commission (CFTC)
In 2015, the CFTC declared bitcoin is treated as a commodity, like gold.
3. Internal Revenue Service (IRS)
In 2014, the IRS stated bitcoin is treated as property for Federal income tax purposes.
State Legislation:
Bitcoin's legal definition is a little more complicating when it comes to each individual state.
Most US states are pro-bitcoin or neutral and at least let individuals invest in the asset, however, a few states are fighting back against its adoption.
If you live in New York or Hawaii, I suggest reading up on State laws to make sure you are interacting with Bitcoin legally.
City Legislation:
Bitcoin's legal definition is much more complicating than state legislation when it comes to each individual city.
Generally, cities are fine with individuals investing in Bitcoin. If you plan to mine or earn bitcoin in various ways, it may not be a bad idea to read up on local laws.
What you need to know is that under Federal law, buying, selling, and investing in bitcoin is not illegal.
You may be taxed differently depending on how you use Bitcoin and the city/state you are living in, but at least you will not get thrown in jail for using it.
Happy Saturday,
-Pod
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Eric Podwojski
Founder, Bitcoin EDU
Twitter: @epodrulz
