I read a lot of articles every week. Most of them have something to do with investing, and more specifically, with cryptocurrency. It seems to me the various levels of US government are confused on how to categorize cryptocurrency…is it a security, property, currency or a commodity?
First look at the SEC (Securities Exchange Commission), which treats crypto as a security. The SEC has published that “merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security. Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to contain the hallmarks of a security under U.S. law.” and that “to date no initial coin offerings have been registered with the SEC.” (1) Next, see how the IRS (Internal Revenue Service) views cryptocurrency as property: “… virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency.” (2) Now if you travel to Arizona, crypto is regarded as currency. This state’s Senate recently passed a bill to let its residents pay their taxes with cryptocurrency. (3) Lastly, we move to Wyoming. Their House of Representatives just passed a couple of bills confirming they consider cryptocurrency to be a commodity and its people don’t have to pay taxes on it. (4)
Obviously there are several schools of thought on the subject of cryptocurrency, and some are at odds with each other. What is your opinion on how it should be defined and handled? I am inclined to think cryptocurrency does not fall into any one of these isolated categories. Perhaps it should be viewed as its own unique grouping, i.e. awesome-sauce.
(1) https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11
(2) https://www.irs.gov/newsroom/irs-virtual-currency-guidance
(3) https://apps.azleg.gov/BillStatus/BillOverview/69854?SessionId=119
(4) https://bitcoinmagazine.com/articles/wyoming-house-unanimously-approves-two-pro-blockchain-bills/