Trade and store crypto
Can I trade Bitcoin and cryptocurrency in America?
Introduction to Bitcoin and cryptocurrency trading in the USA
Bitcoin price falls and Stable Coin collapses and all manner of crypto exchange problems have lent further urgency to the USA’s crypto stance, which up until lately has been rather uneven across the states.
Now, moves for consolidation on crypto law and regulation over stablecoins are gaining pace, led by President Biden’s Executive Order, the SEC’s commitment to bringing crypto in line with other securities regulations, and the Federal Bank’s demand for stablecoin regulation.
Basically, the Executive Order released in March 2022 proposes something the US has not had since crypto took off, and that is a consolidated national strategy for digital assets (to be fair, not many countries do). On the menu are greater consumer protection and coordination to tackle money laundering and crime, promoting safe and more attainable financial services, and supporting technological advancement in digital assets and blockchain.
The US is shaking down the industry and bringing it into the mainstream. The further development of a US CBDC is nothing new; nearly all central banks are looking at this – and all have discovered pros and cons.
However, the recent all-important Infrastructure Investment and Jobs Act is wide-ranging legislation but has included provisions for cryptocurrencies too. Accordingly, any company or person transferring crypto assets for someone other than themselves automatically becomes a broker. Crypto exchanges are required by law to record all sales and purchases of any crypto, including gains and losses from purchase to sale. Crypto investors will be tracked on trading for tax purposes. The USA has been tightening up and clarifying all areas of crypto activity with complete identification required before anyone can trade. Some of the key issues with cryptocurrencies are very much on the legislative agenda in the states. These concern crypto custodial services and crypto sales being offered by banks (always a big step). ICOs, the issue of Stablecoins, and the use of crypto as collateral for loans. In view of the FTX debacle, many governments are tightening up all aspects of crypto, so it remains to be seen which way forthcoming US legislation and thinking goes.
Over the past 18 months up to the start of 2023, a large number of influential financial institutions were broadly supportive of the ability to provide crypto-asset custody. These include the Bank of New York Mellon or BNY Mellon which announced its intention to hold and transact Bitcoin and other cryptocurrencies on behalf of its clients.
SEC updates
Amid the push for increased legislation and oversight, the new $1.2 trillion bipartisan infrastructure bill may be the final nail in the coffin for crypto’s anarchic reputation. Despite concerted lobbying from the crypto industry, crypto brokers of all stripes, including cryptocurrency exchanges, are now required to issue a 1099-B, notifying the IRS directly of all crypto transactions. Bipartisan efforts were made in both the House and the Senate to amend the bill but were not successful. All of these developments suggest that the US is finally gearing up to create comprehensive cryptocurrency legislation.
Crypto price falls and stable coin collapses have lent further urgency to the USA’s crypto stance, which up until lately has been rather uneven across the states.
Now, moves for consolidation on crypto law and regulation over stablecoins are gaining pace, led by President Biden’s Executive Order, the SEC’s commitment to bringing crypto in line with other securities regulations, and the Federal Bank’s demand for stablecoin regulation. Source: CoinTelegraph.
Bringing Bitcoin into the mainstream
Basically, the Executive Order released in March 2022 proposes something the US has not had since crypto took off: a consolidated national strategy for digital assets. On the menu are greater consumer protection and greater coordination to tackle money laundering and crime, the promotion of safer and more attainable financial services and the support of technological advancement in digital assets and blockchain.
The US is shaking down the industry but also bringing it into the mainstream. The further development of a US CBDC is nothing new; nearly all central banks are looking at this – and have nearly discovered pros and cons.
Whilst the SEC is keen to bring crypto exchanges into line, perennial concerns about how to define cryptocurrency remain: is it an asset or a security (details like these matter to the agencies overseeing them)? The SEC’s revamped Crypto Assets and Cyber Unit is now a clear signal to anyone trying to dodge the long arm of the law.
The US is still a Bitcoin powerhouse
Ukraine, inflation on the move, the prospect of ever-rising interest rate rises, and the huge drop in crypto prices early during 2022 have dampened the appetite for risky investments – including Bitcoin, to say the least. Many investors are currently removing risk from their portfolios in the US and elsewhere.
However, much like Australia, the US sees greater and clearer crypto industry regulation as the best approach for reducing risk rather than hardline bans and prohibitions. The Federal Reserve is also looking at issuing a U.S. digital currency.
That said, the US still has by far the highest number of ATMs in theCoincub ranking and is equaled only by Germany in the high number of its Bitcoin nodes. Its percentage of the population owning crypto is huge, but just behind Singapore. In pure numbers, the US’ 27 million people holding crypto shows just how crypto-enthusiastic the country is.
US regulators mainly see existing laws to bring cryptocurrencies under their supervision as adequate without the need for new legislation. However, that doesn’t mean new legislation won’t be forthcoming and the subject still creates much debate.
A recent report from March 2022 by the Center for American Progress (CAP), for example, regarding the way forward to govern crypto forcefully suggests the need for Congress to take adopt a new path for crypto regulation. It argues that crypto assets, securities, commodities, stablecoins and NFTs should be regulated like traditional currency/cash and should not be allowed to stand alone under a distinct regulatory regime. The debate continues but the US remains a powerhouse of crypto adoption – despite the turmoil affecting the world at the moment.
The US gets a high score for wide consumer acceptance of crypto, with one of the world’s leading exchange-listed on Wall St. and retail banks looking to compete for services, but a disparate crypto focus from state to state.
Bitcoin trading and law in the USA
Existing US Bitcoin and Crypto legislation
The good news is that investing or trading in cryptocurrencies such as bitcoin is legal and well-established in the US. The gains or losses you make will have a bearing on your tax situation.
The IRS plays hardball with tax and failure to declare that you’re investing in bitcoin can leave you open to severe penalties. There are an ever-increasing number of crypto exchanges that make it easy and straightforward to buy, sell and invest in bitcoin (BTC) and other cryptocurrencies. Most will also prepare the records of transactions you need to make your tax declarations.
Under pending new laws an exchange that undertakes crypto trades for clients will be required to report tax information about those trades to the IRS. This is mooted as being ‘investor friendly’ because it means you’re less likely (almost certainly less likely) to forget to file your tax returns. In official terms, it makes tax compliance easier.
Legal – forthcoming crypto legislation
Legislation is constantly being reviewed and passed, mainly to do with money laundering and taxation.
Bitcoin and crypto taxation in the USA
Income tax USA
America’s Internal Revenue Service (IRS) identifies crypto assets as property, not currency. As a result, the tax rules that apply to dealing in other forms of property such as rare coins or stamps that can be traded for profit also apply to bitcoin and other cryptocurrencies.
There are no taxes on buying or holding cryptocurrency. Crypto received in a fork becomes taxable when you have the ability to transfer, sell, exchange or otherwise do something with it. However, you will be taxed on any transactions you make and you’ll have to notify the IRS of your trading in the year. Tax payable varies on transactions you make in the short term and over the long term.
Holding bitcoins in your wallet and sitting on them, or transferring them between wallets incurs no tax, but make sure you aren’t getting confused – it’s easy to do – between transferring them, transacting them or disposing of them.
On the plus side, your losses may be deductible and can also be used to offset capital gains in a given tax year. Once again, keeping records is vital and the IRS will most certainly want an account of your activity for tax records and are hot on evasion.
As with any income, your bitcoin will come under the tax laws of the country where you are legally resident. If you move outside the US but are still a resident, make sure you have detailed transaction reports about your purchases and sales across all exchanges you used. If you set up a business to trade bitcoin, that business will come under the tax laws of the country it operates from.
Tax on Bitcoin mining
It’s highly technical and beyond the scope of most individuals, but mining for bitcoins or any other cryptocurrency in the US is, you guessed it, a taxable event. Not that it’s putting anyone off, as the United States is the global top dog for bitcoin mining. China held the title, but that country has gone into the crypto-reverse with cogent bans on crypto trading that have brought the activity to a standstill. As a result, the US is up from around 21.8% this year compared with 4.2% a year ago. For the record, Kazakhstan (18.1%), Russia (11.2%), and Canada (9.6%) were other leading destinations for bitcoin miners. If you do go in for mining, you can make business deductions for equipment and resources, but deductions are related to whether you are mining as a business or for personal gain. Your mined coins will be valued at their fair market price and you’ll also be taxed on your transactions with it. The moral of the story? Keep records!
Crypto and Bitcoin financial services in the USA
Fin services – banking
A growing number of banks are able to offer crypto custody services to facilitate account holders who require it – buying crypto through bank relationships as opposed to through apps. This is a breakthrough moment for crypto in the US.
With crypto services offered to high-net-worth clients through investment banks, the trend is to allow small investors some sort of access to crypto through mainstream banks and services.
Fin Services – Defi
Defi is a controversial subject the world over and for the US financial system, the jury is out as to its mainstream adoption, even though many organizations appear to be investing in Defi protocols.
Spending bitcoin and crypto in the USA
The US is leading the way in the adoption of bitcoin and has several world brands that accept bitcoin payments, including, most famously, Microsoft, Overstock, and Starbucks. In most cases, it is possible to buy vouchers with your cryptocurrency that may then be indirectly used with participating outlets.
If you’re feeling generous, you can gift crypto up to $15,000 per recipient per year without paying taxes, but if it exceeds this amount per recipient, you must make a gift tax return. You can give a gift to a recognized charity or non-profit organization free of tax and most crypto exchanges will be able to advise on gifting your cryptocurrency.
Compare countries on their crypto-friendliness
Want to find out how the USA compares to other countries in terms of their crypto-friendliness? Read here about the crypto economies in Germany, Portugal, Switzerland, and China or read Coincub’s latest Global Crypto Ranking.
Crypto Exchanges
Buy bitcoin on crypto exchanges regulated in the USA
| NAME | RATING | FOUNDED DATE | DEPOSIT METHOD | BASED IN | REVIEW | SIGN UP | ||
|---|---|---|---|---|---|---|---|---|
| #1 |  | Kraken | 4.3 | 2011 | Card Bank | San Francisco | Coincub Review | Register Now |
| #2 |  | Buy Crypto Uphold | 4.17 | 2015 | Bank account Credit/debit card Apple/Google Pay Wire transfer Crypto networks | USA | Coincub Review | Register Now |
| #3 |  | Coinbase | 3.9 | 2012 | Credit Card Bank Transfer | USA | Coincub Review | Register Now |
| #4 |  | eToro | 3.6 | 2007 | Credit Card Bank Transfer | Cyprus | Coincub Review | Register Now |
#1Kraken 4.3
#2Buy Crypto Uphold 4.17
#3Coinbase 3.9
#4eToro 3.6
Crypto regulation in USA
Security
Blockchain technology has promoted an upsurge in cryptocurrencies and crypto trading. With returns on cash suffering from worldwide low interest, there has been huge interest in bitcoin and other digital assets/currencies as a form of investment and speculation.
Remember, as a beginner or experienced trader it pays to do some research and only deal with crypto exchanges that are established and carry insurance to protect your investment. Claiming a loss through fraud or theft is quite complex as there are so many definitions to comply with, including asset price and circ*mstances. You’re more likely to gain relief through a wider loss caused by a common disaster.
Transparency
Identification is required and doing your homework is always a good idea. Before trading, determine what sort of exchange and wallet you need, what fees are involved, etc. Reputable exchanges carry insurance against fraud or hacking, so in this event, you’re more likely to be claiming some form of compensation from the exchange where the system has broken down.
United States Leads with Colossal Gains
The United States has positioned itself as the undisputed leader in profit generation. Despite the mixed signals often emanating from legislative narratives and the occasional departure of crypto companies seeking regulatory havens elsewhere, the underlying financial success in the crypto sector within the U.S. paints a different picture.
Contrary to the demise foretold by some industry leaders, the cryptocurrency sector in the U.S. is thriving, significantly outpacing other nations in realized gains. Another crucial factor in considering the US as the leader in this space is the country’s substantial share of the bitcoin mining market, accounting for 40% of the global total. This signifies a commitment to the industry and translates into significant financial returns.
In 2023, the U.S. astonishingly captured $9.36 billion in cryptocurrency gains, overshadowing everybody and far ahead of the second-best, the United Kingdom, with $1.39 billion. This American supremacy in the crypto profit sphere is even more remarkable when considering the European landscape, which, despite its robust regulatory frameworks, banking integration, service offerings, and employment opportunities in the sector, lags in profit generation. The distinguishing factor for the U.S. is its unparalleled ability to generate profits, an aspect often underestimated by onlookers.
Positive Regulation 2
Negative Regulation 0
Institutional Outlook 5
Financial Services
Crypto Facilitation - Banks 3
Crypto Services - VASPS 2
Crypto Pensions / Investment Industry 4
Business Community and Enterprise Funding 4
Coincub’s beginners guide on how to buy Bitcoin in the USA?
Purchasing Bitcoin in the USA can be done through a variety of methods, including cryptocurrency exchanges, peer-to-peer marketplaces, and ATMs. Here is a more detailed guide on how to buy Bitcoin in the USA:
- Choose a reputable exchange: Popular exchanges in the USA include Coinbase, Gemini, and Kraken. These exchanges allow you to buy and sell Bitcoin using US dollars and other fiat currencies, and they typically have strict compliance standards to comply with US regulations. It’s recommended to compare the fees, security measures and features of each exchange before signing up.
- Set up an account: Once you’ve chosen an exchange, you’ll need to create an account by providing your personal information and verifying your identity. This typically involves providing a copy of your government-issued ID and proof of residence.
- Add Payment Method: Once your account is set up, you’ll need to link it to a payment method, such as a bank account or credit card. This will allow you to deposit funds into your account and buy Bitcoin.
- Buy Bitcoin: Once your account is funded, you can place an order to buy Bitcoin. You can choose to buy a specific amount of Bitcoin or buy a fraction of a Bitcoin. It’s recommended to start with a small amount and get familiar with the platform and process before making larger purchases.
- Store your Bitcoin: Once you’ve bought Bitcoin, it’s important to store it in a secure wallet. The exchange may have a built-in wallet, or you can transfer your Bitcoin to a hardware wallet or software wallet.
Please note that buying Bitcoin and other cryptocurrencies is a high-risk investment and should be done after proper research and consultation with a financial advisor. It’s also important to be aware of the regulations and laws in the USA regarding cryptocurrencies, as it vary from state to state.
But this is America, nobody wants the noob version. Here is your advanced manual.
The advanced way to buy Bitcoin in the USA
An advanced way to buy Bitcoin would be to use a decentralized exchange (DEX) or a non-custodial platform, as these allow you to trade Bitcoin directly from your own wallet, rather than through a third-party intermediary.
Here’s a more detailed guide:
- Choose a decentralized exchange: There are several decentralized exchanges available, such as Uniswap, Sushiswap, and Curve. These platforms are built on blockchain technology and allow you to trade Bitcoin and other cryptocurrencies without the need for a centralized intermediary.
- Set up a wallet: In order to use a DEX, you’ll need to have your own wallet to store your Bitcoin. This can be a hardware wallet like Trezor or Ledger, or a software wallet like MetaMask or MyEtherWallet.
- Connect your wallet: Once you have a wallet set up, you’ll need to connect it to the DEX. This typically involves importing your wallet’s seed phrase or private key into the DEX’s interface.
- Trade Bitcoin: Once your wallet is connected, you can place an order to buy or sell Bitcoin. With DEXs you can use different trading pairs like Ethereum or Stablecoin, and you will be in control of your private keys.
- Store your Bitcoin: Once you’ve bought Bitcoin, be sure to store it in a safe place, whether it is your wallet or a cold storage solution.
Keep in mind that DEXs usually have less liquidity than centralized exchanges, and you may experience more volatility in the prices, also it could be less user-friendly for those new to crypto. Also, it’s important to note that regulations regarding decentralized exchanges may vary in different jurisdictions.
