in march 2013
when the US treasury wrote legislation that bitcoin was recognised as currency(but not legal tender status), this allowed the FINcen/FATF(financial action task force) to gain traction writing conditions of use of bitcoin on businesses that accept bitcoin, whereby they needing register as money service businesses to KYC their customers under regulations such as the BSA(bank secrecy act).. this started the ability to then write more regulations over the years
The Financial Crimes Enforcement Network (FinCEN) is issuing this interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act (BSA) to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies.1
Such persons are referred to in this guidance as users, administrators, and exchangers, all as defined below.2 A user of virtual currency is not an MSB under FinCENs regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. However, an administrator or exchanger is an MSB under FinCENs regulations, specifically, a money transmitter, unless a limitation to or exemption from the
definition applies to the person
in march 2014
when the IRS recognised bitcoin as property currency(asset) (a subclass of "currency" thats not legal tender) this then made bitcoin treated as currency but not legal tender. so employees receiving wages in bitcoin need to declare it for income tax (much like americans have to declare foreign income not treated as legal tender in the US)
In some environments, virtual currency operates like real currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance but it does not have legal tender status in any jurisdiction.
..
The notice provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency. Among other things, this means that:
Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
in 2015 when the US CFTC recognise bitcoin as a commodity currency(another subcategory of "currency" thats not legal tender)
they stating that to be a commodity exchanger bitcoin futures businesses who wanted to futures/derivatives trade needed to register first as commodity exchanges..
Virtual Currencies Such as Bitcoin are Commodities Section 1a(9) of the Act defines "commodity" to include, among other things, "all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in." 7 U.S.C. § 1a(9). The definition of a "commodity" is broad. See, e.g., Board ofTrade ofCity ofChicago v. SEC, 677 F. 2d 1137, 1142 (7th Cir. 1982). Bitcoin and other virtual currencies are encompassed in the definition and properly defined as commodities.
i could go on..
point being. when being recognised as forms of currency of different levels, new regulations and conditions apply
because of the 2013 recognition as currency. this then activated the BSA jurisdiction. which then conditioned usage.. whereby by recognising it as a currency instead of just property(like pokemon cards, cars, art) bitcoin using businesses could not then swap openly. they could not offer ETF/(spot or futures) unless later regulations then allowed that functionality.
its also worth noting that due to 2015 classification as commodity allowed futures ETF. but not spot
its also worth noting that due to 2024 classification as security allowed spot ETF
its also worth noting due to commodity classification it allowed other agencies to get involved like the EPA and EIA(environmental protection and energy information agencies) wanting to survey bitcoin miners about who they are, where they are and what miners they have, how many, how its powered, who powers it, etc
