Laws Affecting Cryptocurrency
While the laws below are certainly not exhaustive, they will provide a general understanding of how the legal system attempts to regulate cryptocurrencies. If you have any questions or concerns, please feel free to contact our team of attorneys at Fourscore.
Salaries and Wages Paid in Cryptocurrency are Taxed
The IRS has mandated that any wages paid in cryptocurrency are subject to income taxes. Therefore, employees and contractors paid in cryptocurrency should account for that payment when filing their W-2 or 1099 forms.
Cryptocurrency is Considered Property
From the IRS’ perspective, cryptocurrency is also considered property. Therefore, it will be subject to either short-term or long-term capital gains taxes, if the value appreciates. It is interesting to note that although the value of U.S. dollars also fluctuates, the physical dollars you possess are not technically your property and therefore are not subject to capital gains taxes when their value increases due to market fluctuations. On the flip side, when losses are incurred on your cryptocurrency, you may be able to use them as a tax write-off.
Cryptocurrency Security Offerings Likely Need to be Registered with the SEC
Like most other security offerings, cryptocurrency offerings should usually be registered with the SEC. This registration, pursuant to the Securities Act of 1933, is meant to protect potential purchasers from predatory schemes that were rampant prior to the stock market crash of 1929. Please note that each state may also regulate securities offered within their borders, which are referred to as “blue sky laws”. This means that you will need to make sure that any cryptocurrency you offer as a security complies with both federal and state laws.
While it is still anyone’s guess as to how governments and markets will react to the increasing prevalence of cryptocurrencies, by staying informed you will stand a better chance of benefiting from the crypto revolution.
Here at Fourscore, we are very enthusiastic about representing clients involved in cryptocurrency and would be happy to speak with you more as you have questions. You can contact us here, and as always, our first conversation is on us.
Based in the Research Triangle region of North Carolina, Fourscore Business Law serves entrepreneurs and businesses in Raleigh, Durham, Chapel Hill, Wilmington, Charlotte and throughout the Southeast. We also represent venture capital funds and other investors who invest in companies located in New York, Silicon Valley and everywhere between. The idea of delivering maximum impact in a simple and succinct manner is what we’re calling the Fourscore Principle. And that is what Fourscore Business Law is based on. Our clients operate in a broad range of industries including tech, IoT, consumer products, B2B services and more. Questions? Shoot us an email or give us a call at (919) 307-5356. Your first call is on us.