Is It Legal To Accept Crypto Payments In The United States?

Under IRS guidelines, businesses that accept cryptocurrency payments must report the value of those payments in U.S. dollars as of the date of receipt. Cryptocurrency received as payment for goods or services is subject to income tax

Is It Legal To Accept Crypto Payments In The United States?

With its ability to facilitate safe, decentralized transactions outside of established financial institutions, cryptocurrency has become a ground-breaking new class of digital assets. However, to ensure compliance with applicable laws and regulations, businesses must also consider significant legal considerations that accompany this rising acceptability.

Despite the significant increase in accepting cryptocurrency payments by businesses, countries around the world are constantly putting legal restrictions on the acceptance and trade of cryptocurrencies which usually begs the question of whether cryptocurrency is legal in certain jurisdictions.

In the United States, it is legal to accept cryptocurrency with restrictions only existing in specific state laws. In federal law, however, the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC) are the major bodies guiding the acceptance of cryptocurrency.

The IRS has provided guidance on the tax treatment of cryptocurrency transactions. Cryptocurrency is treated as property for federal tax purposes. The Securities and Exchange Commission (SEC) has issued guidance on when cryptocurrencies may be considered securities and subject to securities regulations. Regulations governing cryptocurrency transactions can vary significantly from state to state. Some states have enacted laws or issued guidance that is favorable to cryptocurrency businesses, while others have implemented more restrictive regulations. Businesses must understand and comply with applicable state-level regulations to operate legally.

IRS Guidelines on Cryptocurrency

The IRS has provided guidance on the tax treatment of cryptocurrency transactions through various publications and notices. In 2014, the IRS issued Notice 2014-21, which established that virtual currency, including cryptocurrency, is treated as property for federal tax purposes. This means that cryptocurrency transactions are subject to the same tax principles as transactions involving other property types, such as stocks or real estate.

Under IRS guidelines, businesses that accept cryptocurrency payments must report the value of those payments in U.S. dollars as of the date of receipt. Cryptocurrency received as payment for goods or services is subject to income tax, and businesses may be required to pay estimated taxes on the value of cryptocurrency received. If a business sells or exchanges cryptocurrency, any resulting gains or losses are subject to capital gains tax treatment.

It's important for you, as a business owner, to maintain accurate records of cryptocurrency transactions, including the fair market value of the cryptocurrency at the time of each transaction, to ensure compliance with IRS reporting requirements.

SEC Regulations on Cryptocurrency

The SEC regulates securities markets in the United States and has issued guidance on when cryptocurrencies may be considered securities. The SEC has stated that whether a particular cryptocurrency is considered a security depends on the specific facts and circumstances of its issuance and use.

In 2017, the SEC issued the "DAO Report," which concluded that certain cryptocurrencies, such as those sold in initial coin offerings (ICOs), may be considered securities under U.S. securities laws. This determination was based on the Howey Test, which evaluates whether an investment contract exists based on the investment of money in a common enterprise with an expectation of profits primarily from the efforts of others.

Variances in State Laws Regarding Cryptocurrency

While federal regulations provide a broad framework for cryptocurrency transactions, state regulations play a role in shaping the legal requirements for businesses accepting cryptocurrency payments. State laws regarding cryptocurrency can vary significantly, and you must check through your respective state laws to ensure compliance.

States have taken different approaches to regulating cryptocurrency, leading to variances in laws and regulations across the country. Some states have embraced cryptocurrency and blockchain technology, enacting laws that provide clarity and regulatory certainty for businesses operating in this space. Other states have adopted a more cautious approach, implementing stricter regulations or issuing warnings about the risks associated with cryptocurrency transactions.

Many states require businesses that transmit cryptocurrency or facilitate cryptocurrency transactions to obtain a money transmitter license. These regulations are intended to prevent money laundering and protect consumers but can impose significant compliance burdens on businesses. Some states have created special licensing requirements or regulatory frameworks specifically for cryptocurrency businesses. These requirements may include cybersecurity standards, consumer protection measures, and disclosure obligations. States may have laws or regulations aimed at protecting consumers who use cryptocurrency, such as requirements for clear and accurate disclosures about the risks of investing in cryptocurrency or prohibitions on fraudulent or deceptive practices. States may also have their own tax laws governing cryptocurrency transactions, including rules for calculating and reporting income or capital gains from cryptocurrency transactions.

How Businesses Can Accept Cryptocurrency in the United States

Major companies in the United States have started accepting cryptocurrency payments for goods and services, signaling a shift toward mainstream adoption. Luckily, the increase in cryptocurrency payment gateways has made it easier for businesses of all sizes to accept cryptocurrency payments from customers.

CCPayment is a leading crypto payment gateway that allows businesses to accept cryptocurrency easily and without any problems. CCPayment combines all the necessary features you seek in a suitable payment gateway. CCPayment allows e-commerce merchants to easily accept crypto payments from shoppers worldwide.

Regardless of the e-commerce platform you use, CCPayment integrates easily with all without requiring the assistance of a website developer or expert technical knowledge. All you need to do is integrate CCPayment’s API into the checkout page. So, once customers choose to pay with crypto, they are directed to the CCPayment API deposit page, where the transaction will be processed.

Shoppers can, through a single checkout, pay for goods in any cryptocurrency of their choice. CCPayment lets shoppers send crypto to a designated wallet address and pay for their goods easily without going through any lengthy process. As a merchant, you do not need knowledge of how to code. CCPayment enables the easy integration of existing checkout pages without technical knowledge. CCPayment supports over 900 cryptocurrencies, including popular crypto assets like Bitcoin, Ethereum, other altcoins, and stablecoins.

CCPayment provides a simple, safe, and cost-effective solution for businesses of all sizes and sectors to accept cryptocurrency payments, without breaking any laws. In the spirit of full compliance with relevant legal acts and regulations. CCPayment puts in place a thorough  Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) Policy. Keeping relevant information for each customer is important to CCPayment because it is believed that fighting money laundering and terrorist financing requires having a strong enough audit trail. Hence, in case of any legal dispute, there is an audit trail for you to rely on.

Final Thoughts

In summary, while the acceptance of cryptocurrency payments presents exciting opportunities for businesses, businesses need to understand and comply with relevant legal considerations to mitigate legal risks and ensure a smooth transition to accepting cryptocurrency payments.

The legal landscape surrounding cryptocurrency in the United States is primarily shaped by federal regulations issued by agencies such as the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and various state regulations. While you make attempts to understand these regulations that affect your business, CCPayment is positioned to help you accept cryptocurrency payments while mitigating legal risks.

Don’t miss out on the opportunity to set your business apart from the competition while adhering to the law. Make the smart choice now by integrating CCPayment into your payment processing system.