What had been a rumor going around the blockchain industry has become a reality. Coinbase, Circle and Protocol Labs, among others, have joined forces to form the Blockchain Association. The group is built around the idea of having experts on cryptocurrencies and blockchain technology lobby and pressure decisions makers in Washington.
There is said to be eight physical members of the group, including Coinbase chief legal officer Mike Lempres, who will serve as president of the Blockchain Association. Other people with both blockchain and political experiences are set to join the group backed by these companies.
What Are the Goals for the Blockchain Association?
The initial talk has been that the association’s first order of business will be to push the government to set clear regulations. Up to this point, the United States Treasury Department does not recognize any form of cryptocurrency as a legal tender. FinCen, a bureau of the Treasury Department, said in 2013 that “virtual currency does not have legal tender status in any jurisdiction.”
Since that date, however, the debate has continued to rage on as many institutions have labeled cryptocurrencies as “commodities” rather than financial assets or any other definition. As of today in the United States, establishments cannot legally accept any form of payment through digital currencies. Companies like Coinbase charge 1% of the total transaction to interchange cryptocurrencies to legal tender currencies. This isn’t a bad number compared to the 2 to 4% that companies like Paypal charge per transaction.
Paying Taxes on Cryptocurrencies
As already stated, cryptocurrencies are classified as commodities in the US. As such, their trading and distribution are monitored by the Commodity Futures Trading Commission, not by the Federal Reserve or any other banking institution.
One of the main issues that companies in the US face is that they are still skeptical toward the use of cryptocurrencies because of the lack of tax regulations. In simple terms, established companies won’t touch cryptocurrencies because they don’t know what to do with them in their books as they may jump out as a suspicious activity that can be linked to money laundering.
Essentially, the goal of the Blockchain Association is to get rules and laws in place that will benefit crypto companies, at least exchange companies like Coinbase. We may be close to seeing a breakthrough in new legislation regarding cryptocurrencies in the United States.