The United States of America is the biggest global market for Bitcoin and the Bitcoin price is most often quoted in terms of US Dollars. As in many other areas, Americans have long been at the forefront of Bitcoin. Many of the biggest Bitcoin companies in the world, spanning sectors from exchanges to miners to software development, were founded in the USA, for example. Many of the most famous or accomplished coders, investors, and thinkers in the space are also American.
Certain schools of thought generally associated with America have also greatly influenced Bitcoin and probably even contributed to its creation. The cypherpunk movement, long considered the intellectual wellspring of Bitcoin, was primarily an American movement centred in Silicon Valley. Indeed, many informed Bitcoiners consider it quite likely that Satoshi Nakomoto was one (or many) of these original cypherpunks. Beyond the cypherpunk movements, adherents to political movements which are primarily American in character, such as libertarianism, anarcho-capitalism, and even unadulterated capitalism, were some of the earliest Bitcoin adopters.
American soil remains perhaps the most fertile in the world for the creation and dissemination of innovative - even disruptive - technologies. One only has to look at the success of American technologies, such as integrated circuits or the internet, to realise this. The US was therefore the perfect incubator for Bitcoin.
However, while American citizens and businesses have done much to accelerate Bitcoin’s spread throughout the world, there’s also a dark side to US dominance. America’s financial regulations are largely behind the necessity for Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements on exchanges, Coinmama included, as most world governments have adopted such measures. For this reason, America’s regulatory and taxation approach to Bitcoin is likely to set the tone for many other nations.
In this article, we examine the current regulatory and tax situation in America. Thereafter, we explain how Americans can purchase bitcoins (BTC), using any credit or debit card issued by either VISA or MasterCard.
American Taxation of Crypto
The IRS views Bitcoin the same as property for tax purposes. This means that capital gains tax is levied on Bitcoin profits and income tax on trading and transactions. While a minority of Americans report such profits, in 2018 the IRS successfully subpoenaed a major American exchange for the trading records of its big clients. The IRS is growing wise to crypto and wants its slice of the pie, in other words.
All that said; you can minimize your tax burden by holding coins for longer than year. This will allow you to avoid the 23% income tax payable on short-term profits in favour of the 15% rate levied on longer-term capital gains.
Coinmama recommends keeping detailed records of all crypto transactions and consulting a tax or legal professional for further advice. The Bitcoin Taxes subreddit also contains a lot of useful information for American taxpayers, although its content should not be viewed as authoritative.
American Bitcoin Regulations
Bitcoin is not considered legal tender in the USA, according to FinCen (the Financial Crimes Enforcement Network). This doesn’t mean that Bitcoin is illegal in the States - it isn’t! - but that Bitcoin isn’t officially recognised as money. One of the advantages of this ruling is that Bitcoin doesn’t (as of August 2018) violate the prohibition on online gambling with legal tender. However, if you intend to trade Bitcoin with the general public as a business, FinCen requires that you register as an MSB (Money Services Business).
The exact legal status of cryptocurrency varies between agencies. As mentioned above, the IRS views Bitcoin as property. The CFTC (Commodities Futures Trading Commission) views Bitcoin as a commodity. The SEC (Securities and Exchange Commission) views certain ICO tokens as securities, but fortunately does not apply securities law to Bitcoin. As proven in the Trendon Shavers case, the SEC will prosecute fraud conducted with Bitcoin.
It’s worth noting that the CFTC oversees the CBOE (Chicago Board Options Exchange) and CME (Chicago Mercantile Exchange), two commodity exchanges which list Bitcoin futures. It’s expected that the SEC will, sooner or later, approve Bitcoin futures or ETF (Exchange Traded Funds) for trading on the stock exchanges which it regulates. As Bitcoin is increasingly being integrated into the traditional financial system, its legality becomes ever more assured.
Please also be aware that Bitcoin regulations can vary significantly between states. While it’s beyond the scope of this article to list the current laws for all 50 states, this article does exactly that. Note that it was last updated in late 2017, so please take it only as a starting point for your own research.
How to Buy Bitcoin in America
If you’re in America and interested in getting involved in the Bitcoin ecosystem, Coinmama provides one of the quickest and most convenient ways to buy bitcoins (and many other cryptocurrencies) with Dollars. All you need is a credit or debit card issues by either MasterCard or VISA and about 5 minutes to follow our simple process.
Here’s how to get started with building up your Bitcoin portfolio, in 4 easy steps:
Step 1 - Create Your Coinmama Account:
- Head to the Coinmama website and select the blue “Sign Up” tab.
- You’ll need to enter your email, password, first name, last name and your country of residence.
- If you already have an account, just sign in with your login details.
- For more information on how to create an account with us, click here.
Step 2 - Verify Your Account:
- To purchase bitcoin (BTC), you first need to become verified.
- It’s necessary to upload your ID or passport, plus various other documents depending on which level of verification you wish to reach. Further tiers are also unlocked by purchase amounts.
- For further help with account verification, please click here.
Step 3 - Purchase Your Bitcoin:
- Once signed in and verified, navigate to the “Bitcoin” tab in the top menu bar.
- Once there, you will be presented with several choices: either purchase a set amount of BTC, or enter in a custom amount of up to roughly $5,000 (as of the time of writing) for card purchases. You can also choose to price BTC against USD or EUR, obviously you should choose USD.
- Supply your Bitcoin wallet address. This address is where we’ll send the coins which you buy. You can re-use this address for subsequent purchases or get a new one from your wallet; it’s up to you.
- Next, select the “Proceed to checkout” button.
Step 4 - the Checkout Page:
- Complete the form with your relevant details. Make sure that your card or banking details, such as your name, correspond with the details you supplied when creating your Coinmama account.
- Finally, proceed to payment by clicking on the “Pay now” button. For card purchases, kindly note that only cards issued by VISA or MasterCard are accepted.
Once your card payment has been made, the order status will read “In Process.” This means that your order is being processed by the bank or card company. Credit card orders will be processed within minutes under normal conditions.
Once payment has been made, our BTC transaction to your wallet’s address then needs to be confirmed by the Bitcoin network. In approximately 10 minutes, a Bitcoin payment will be broadcast from Coinmama’s wallet to the Bitcoin address you supplied in Step 3 point 3.
Note that during times of especially high traffic, your transaction may take longer than normal to appear as confirmed within your wallet. Ordinarily, the transaction will be confirmed within 10 minutes.
For large amounts, it’s recommended that you wait for up to 5 more confirmations. You may then regard the transaction as final and spend your new coins.
Americans should have no problems buying or using Bitcoin, so long as they stay within the fairly reasonable tax and legal guidelines described above. We at Coinmama would like to thank our many American clients for their support over the years.