Crypto Jurisprudence
California Attorney Knowledgeable in Digital Currency Laws
Bitcoin and other digital currencies are governed by a legal patchwork that does not fit neatly together. It can be challenging to determine your rights and obligations in this complex area. California Bitcoin lawyer Roger E. Naghash combines his understanding of virtual currency with skills in transactional, regulatory, and criminal law. From his Orange County office, he serves clients not just in Southern California but throughout the nation.
U.S. Regulations Governing Virtual Currencies
In early 2014, the IRS announced that Bitcoin ownership for investment and use in transactions will be regulated under existing tax law. The IRS classifies digital currency as an asset, subject to capital gains tax and other applicable taxes. The Securities and Exchange Commission (SEC) also has started to enforce its regulations in this area more vigorously. In mid-2014, meanwhile, the Federal Election Commission (FEC) issued draft guidance saying that donations to U.S. elections can include digital currency. However, these donations should be treated the same as the donation of assets, and they are subject to the FEC’s regulatory framework.
The U.S. Treasury Department announced in late 2013 that Bitcoin exchanges may be treated as money transmitters and thus may fall under the regulatory authority of the Treasury Department and other agencies. The Treasury Department clarified that not every buyer or seller of digital currency needs to register as a money transmitter.
At the state level, for example, California recently repealed Section 107 of the California Corporations Code. This section had previously stated that no corporation or individual can put into circulation any money except the lawful money of the United States government.
Business laws such as breach of contract already apply to transactions in general, and therefore they apply to Bitcoin transactions as well. Furthermore, torts such as the tort of negligence can apply in some lawsuits against organizations entrusted with handling digital currency.
Criminal law still applies broadly to virtual currency transactions when a crime has been committed. Due to built-in anonymity features, Bitcoin has been an attractive payment method in the illegal purchase and sale of drugs, weapons, and pornography. It has also been used to a limited extent in money laundering operations and by people who perpetrate theft by fraud.
Since a number of government agencies are still trying to address digital currency issues, more regulation is to be expected in the future. The U.S. Commodity Futures Trading Commission says it may regulate digital currencies trading, and the SEC has also announced its intention to classify Bitcoin-denominated stock exchanges as illegal.
Global Rules on Digital Currencies
Canada has announced that it will apply existing anti-terrorism and anti-money laundering regulations to Bitcoin, and the Canadian Financial Markets Authority has claimed to have some regulatory control over digital currencies.
China declared in late 2013 that banks and third-party payment systems must stop dealing in virtual currency. However, a few months later, Chinese officials mitigated the statement and suggested that they will implement regulations similar to those in the United States. In the Russian Federation, similarly, the Central Bank of Russia has stated that Bitcoin transactions are “dubious” and strongly advised people against participating in them.
Many countries, including those mentioned above, are continuing to investigate regulatory possibilities, and the terrain is clearly unsettled. Since Bitcoin and other digital currencies bring powerful new economic concepts to a preexisting global economy, it is no wonder that regulatory reaction continues to push forward.
Consult a Virtual Currency Lawyer in California
The overall trend shows that Bitcoin and other digital currencies are being regulated more and more over time. As a result, it can be difficult to stay in compliance with the law. Whether you are facing a specific problem, or just trying to keep up with your regulatory responsibilities, you can benefit from having knowledgeable Bitcoin attorney Roger E. Naghash on your side. Call our California office at (949) 955-1000, or use our online form to start a conversation with us.