Hi, I live in Florida and trying to monitor all regulations related to cryptocurrencies to have updated info.
Unfortunately, USA law system is really complicated and mostly based not on current laws, but on court precedents.
For instance, currently, no any law recognised BTC as legal money in the USA or prohibiting exchange.
But in fact, people being arrested just for exchange BTC even, they don’t break any regulation.
(authorities just make up most of the cases by the provocations of BTC users)
Because of the young age of crypto itself, it is not enough precedents, as well any regulations exist.
Also, Each US state actually it is like a different country, have different own constitution, flag, regulations.
Means, what perfectly legal in one state, can be prohibited in another.
Most of US citizens and residents, have to spent lots of time in courts and departments to resolve different issues, like, traffic violations, property issues, running a business, etc…
And to be successful, they have in most of cases use the help of professional lawyers or advisers in a specific field.
But they’re not much of professional lawyers or advisers in a cryptocurrencies at this time.
So, nobody can professionally represent you in court or give you real correct advice related to crypto operations.
You are on your own and depend on luck and how is specific agent or judge will feel about you.
And they will feel BAD about you if anything will be looks for them unusual, means suspicious…
US authorities, like to know everything about everybody.
They like to know, all about your transactions, contacts, where are you spent your vacation and even, what color of toilet paper you are using.
Any attempt to hide ANY info, will be considered as SUSPICIOUS activity and automatically trigger an investigation.
Any operation with amount more than $5000 (or equivalent) considered as “suspicious”.
Actually, any amount can be " suspicious" depends on the situation.
For instance, back in 94, I visited Texas from California and pay by $100 bill in the supermarket. Cachire immediately called police! Because in this area nobody use $100 bills by that time, only checks or cards.
Police came rapidly, but never disturb me, they simply checked me by numberplate of my car, use on-board computer, So by the time I went of store and walked by patrol car, I saw my face on their on-board computer.
They looked at me, no any criminal record, all clean, so they never stop me.
But the fact that authority, acts fast on even little amounts can show system itself.
After 911, in US, things with personal privacy changed even worse!
Now, the authorities really crazy about any activity and trying to get under total control everything!
Last year I was needed to buy some BTC, so I used LocalBitcoins.
And almost immediately was contacted by FBI agent, acting as BTC broker.
From dozens of local ads, they’re 50% of FBI agents!
They are fishing for criminals this way.
The agent was trying to provoke me, asked me to purchase over $5000 in one transaction, but I am refusing.
So after checking all my profile, they lost interest to me, because I am really clean, not buy\sale or (operate exchange with profit).
My record showed that I am used to work with the Department of Security and Investigation, and I just buy BTC for my private little investment.
This situation clearly shows, situation with any cryptocurrencies transactions in the USA.
Any operations with cryptos is not prohibited, but considered as “suspicious” and under tight surveillance.
So, anybody operated any crypto must be prepared to deal with authorities at any time, have ready correct answers and run their business in a safe, legal way.
Actually, in USA people have a legal right of privacy, but to exercise this right, you need to know how exactly deal with a specific part of this.
Say, you want to sale or buy some BTC (or other crypto).
Say, after that, you were contacted by the IRS or FBI and they asked you " what the source of your funds?"
Because you are actually using you private funds legally earned, not any illegal activity related, your answer can be "not of your business!“
YOU ARE IN TRUBBLE!
Remember, they are highly trained professionals!
Their job is to provoke and they will lie to you to get information they need and it is legal in the US.
They may tell you that they have proof that your funds related to terrorists or drug activity, even it was just $50 worth!
Because you are not “cooperate” they can arrest your devices, records and you and keep you without even give you chance call your lawyer (after 911 they can do this).
And they, will find the way to charge you, believe me, even if you are doing all operations, legal ways, just because you are not cooperative.
An this moment, the IRS is searching for all BTC transactions for previous years and making lists of connections of this transaction with US residents.
Guess, what fore they spent so many sources on this?
Well, it is simple, some people under the impression, that if they use crypto, they may not pay taxes, because it is invisible to the IRS.
WRONG! All USA residents and citizens no matter where they live MUST pay taxes on ALL income!
And the IRS has plenty of ways to track you!
Same time, it is many legal ways to avoid taxes, without break any law, but you have to know how and where.
So, To stay out of trouble with cryptocurencyes, you have to be ready to give right answers and proofs to the authorities and make all transactions in a right way.
Take this example:
You are relocating from Europe to the USA and want to buy the house for BTC.
The right way of your actions will depend on many factors as:Are you US citizen or not?
In what state are you planning to purchase property?
Price range of property?
Type of property, (residential, commercial, etc…)
Any relatives or good friends in the US willing to help with purchase paperwork and their income status.
Why all of this important?
OK, You are Not US citizen, in this case, IRS have not any interests about you, only homeland security will be concerned about the legality of your sources, so it is not related to criminal activity.
In this case all you need is some proof that you have not any criminal background in the country you are coming from.
And you will state that the coins is your saving investment.
You can Buy any property in any state without any problem, as soon as you found person, willing to sale for BTC.
Because you are not using any mortgage, in many states, it will be simple registration of “DEED” where no actual amount of purchase registered, In NY it is always $1 In Florida$12 (even sale price is $100k)
And even if you have $10 mil. in BTC, it is nobody’s business, you are not obligated to report it to anyone.
But. As soon, you become US resident, you must pay taxes.
Your BTC is not money legally and until you sell some of them you don’t need to do anything.
If you sale some BTC for US$ in US, You receive income at this moment and must report on your IRS papers.
But if You are US citizen, coming to USA, no matter where you born, and even never was on us soil, You are subject to the US taxes!
In this case, it is will be lots of questions from the IRS.
Say, you are purchase house for $100k, means, you get from a somewhere equivalent of this amount.
No matter you paid in BTC or with gold or silver.
Are you paid taxes on this income?
Not? You are in trouble!
Authorities are always tracking the sale of expensive properties as real estate, boats, aircrafrs, cars etc…
And paying for this as " barter” with BTC, gold or anything else looks suspicious and considered as an attempt to avoid taxes.
So it is will be not a good idea for returning US citizens to flashing BTC in US.
Much better for him if he is pure man, and his loving grandma from Copenhagen or Belgrade pay with BTC for his house, car boat etc. (don’t forget to have a good proof from grandma or uncle…)
About the sale,actually, in the US it is not really matter what you are sale BTC, hammer or chainsaw (if it is not illegal item).
More important how you are sale.
It is illegal to sell anything if you know that this item will be used for crime.
So, if the buyer tells you that he will use a hammer to kill his neighbor and you are sale it to him anyway, you can be charged for this sale.
Same with BTC, if the buyer tells you that he want to use the BTC to buy illegal drugs, and you do not refuse to deal and not report it to the police, you are committing a crime.
About money services business.
Money services business means you are buy and sale and get profit.
In US most of the states is not recognise cryptocurrencyes as money. And not regulate it yet.
NY and California passed laws to require a licence to operate BTC.
So, if you are just buying BTC for investment, nobody can charge you if you are doing this in a way to keep your identity in private. And nobody can say that you are conducting a money services business.
Same thing if you are just sale BTC (if you doing this in a right way).
BUT If you are buying and selling, yes, it is a business, same as if you are buying and selling anything.
You are required to register a business.
You can not legally buy and sale potato or computers without register a business.
And it doesn’t matter you doing this P2P or use some regulated exchange.
Any business must be registered.
Running an unregistered business is a crime in the USA.
But on the other hand, I am personally in favor of cryptocurencies because its unregulated decentralized nature, as well, I am in favor of any related to crypto decentralized services as P2P exchanges.
And register some crypto business will be against of all Idea of crypto I believe.
So, I am trying to constantly learn about all changes in the regulations and related services to be up to date about the situation and avoid any negative issues.
It is difficult for inexperienced enough people, to deal with crypto legally and safely.
Many, have no Idea that they are in a violation of any law or doing transactions unsafe.
So I’m doing my best to help my friends and other crypto users who asking for help on this matter.
Hope, this info will help someone.
I apologize if my post seems unclear in some parts.
Even I live in the USA for over 25 years, English is not my native language, and I am not a professional writer, so if anybody has a question, feel free to contact me.