The US handles almost a quarter (22.6%) of all bitcoin volumes, according to coin.dance statistics, yet regulators across the country’s 50 states have different rulings on the legality and usage of virtual currencies.
Under the Supremacy Clause (Article VI, Clause 2) of the Unites States Constitution, in the case of conflict between federal law and state law, federal law must be applied.Yet no federal law on cryptocurrency has been passed in the US, leaving applications of law up to individual states. Case law has also played a part in shaping US rulings on virtual currency, where case rulings including the SEC vs Trendon Shavers, and the US vs Ross Ulbricht have helped to define where cryptocurrency fits within US law.
Regulatory bodies at federal level have offered guidance to state legislators in lieu of blanket federal law. The Securities and Exchange Commission (SEC) has previously designated digital currencies as securities, and requires registration of any virtual currency traded in the US if it meets the regulator’s definition of an exchange. The Commodity Futures Trading Commission (CFTC) says that bitcoin is a commodity, and offers regulatory guidance based on that assumption. The Internal Revenue Service (IRS) has ruled in the past that cryptocurrency is not currency at all, instead defining it as property in 2014. The Office for the Comptroller of the Currency, through its new fintech charter initiative, has opened the doors for virtual currency firms to apply for banking licenses. Coinbase, one of the largest exchanges in the world, is exploring the option.
State legislators have signed, or tabled, dozens of laws attempting to define, regulate or codify virtual currencies and the blockchain technology underpinning them. This article details the major pieces of legislation which have passed, or failed to pass, in each US state to date.