Contradictory Regulations? Expect More.

by Marvin Dumont

The Wild West of cryptocurrencies has its share of individuals who dislike government bureaucrats. A big reason why is that governments pass burdensome, contradictory regulations that grow over time.

For instance, Americans are subject to federal, state, and local rules that differ from each other. These apply to many industries, including cryptos and marijuana (legal in many states but illegal at federal level).

It confuses consumers: Without consistent guidance, an entire industry is stifled.

U.S. crypto users have to deal with the I.R.S. which classifies cryptocurrencies as property for tax purposes. But because of volatile prices, this treatment is extremely burdensome as traders must account for capital gains or losses on each and every transaction, no matter how small.

Even airdrops are treated as a taxable event.

Then there’s Treasury Department’s Financial Crimes Enforcement Network (FinCEN) which also regulates cryptos. They view digital funds as a virtual currency.

So which one is the right treatment: property or currency? Don’t ask the very government that controls you. They can’t give a single, right answer. But you’ll be fined or imprisoned for non-compliance.

There’s the Commodity Futures Trading Commission (CFTC) which considers cryptos as commodities. While the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have their own guidance.

Confused? You should be. Blame overreach and incompetence. Bureaucrats have a zeal for controlling people’s lives, even though their rules contradict those of other regulators.

Here’s a YouTube video of a business owner whose life has been made miserable trying to make his food business compliant with different government agencies. It’s impossible and costly.

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