Regulation
More US States May Introduce Cryptocurrency Regulations
Cryptocurrencies were originally conceived as stateless entities, not bound by the legal frameworks of any state or country. However, the practical reality is different. Traction for cryptocurrencies has led to increased censorship and government scrutiny. Indifference and cynicism toward blockchain and virtual currency in the United States has given way to concern and reluctant acceptance.
Until last year, news outlets routinely catalogued states as “friendly” and “unfriendly” to cryptocurrencies. That has changed since then. There is a growing recognition that regulation (or even regulatory attention) is a good thing because it establishes rules and order in an otherwise lawless jungle that provides free rein to dubious actors and companies. It also signals an intent to engage in dialogue with companies in the cryptocurrency ecosystem.
In the absence of a federal directive on cryptocurrency, some states have taken matters into their own hands. A patchwork of old and new regulations are being used by states to understand cryptocurrency. But there are three broad areas they are most concerned about: the use of cryptocurrency as legal tender in commercial transactions (including taxation), imposing authority over the operations of cryptocurrency exchanges as money transmitters, and the status of smart contracts and ethereum tokens. (See also: Government Regulations on Bitcoin Around the World)
California and New York take the lead
Very few states have made progress on all three fronts. California and New York, both of which are home to large numbers of crypto businesses, lead the pack. But others are quickly catching up. There are some unlikely contenders. Wyoming, for example, has become one of the most progressive states when it comes to cryptocurrency and blockchain regulation. So has Arizona.
In contrast, Massachusetts has yet to take a stance on cryptocurrencies and blockchain. Similarly, Washington, a state with a thriving tech scene, passed a law in 2017 requiring cryptocurrency exchanges to maintain cash reserves equivalent to the volume transacted on their platform. This move has been interpreted as hostile.
The map below shows which states have introduced cryptocurrency regulations. The states marked in green have taken the lead, while those marked in red have yet to seriously acknowledge them. In between are states that are considering regulation and have introduced or passed bills in their legislatures to exert more control over cryptocurrency ecosystems.
As you can see from the map, the vast majority of states have yet to decide their stance on cryptocurrencies. The good news is that regulatory attention has increased over the past year. Intense media attention and scrutiny is expected to further accelerate the move towards regulating virtual currencies.
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