Appendix 12: United States

Highlights

• At the federal level, virtual currencies like bitcoin are regulated by a number of agencies with sometimes overlapping jurisdictional claims and substantive requirements. CFTC treats it as a commodity, the Treasury Department treats it as a currency for purposes of OFAC compliance, the IRS treats it as property for purposes of capital gains taxation; all rely on extending existing statutes to cover virtual currencies rather than seeking new authority from Congress. At the state level, other licensing requirements may apply to virtual-currency-related businesses.
• Charitable contribution deductions of virtual currencies are typically valued at the fair market value of the virtual currency at the time of the donation. IRS guidance recommends that charities accepting virtual currency donations should treat such donations as non-cash contributions and report them on a Form 990 and its associated Schedule M.
• Just as with other donations, donations of virtual currencies can be made anonymously or pseudonymously. If the receiving charity sells, exchanges, or disposes of any part of the virtual currency donation within three years, current IRS guidance tells charities they must inform the donor of this disposition—guidance complicated by the fact that in some cases the charity will not know the donor’s identity. As part of their annual tax filings, U.S. charities may need to disclose contributions above a certain threshold.
• Approximately 12 percent of the United States’ largest 100 charities accept virtual currency donations, according to recent estimates.

Virtual Currency-Specific Regulations

• The US federal government has not implemented any cryptocurrency-specific regulations. Virtual currencies like Bitcoin are regulated by a number of agencies. CFTC treats it as a commodity, the Treasury Department treats it as a currency for purposes of OFAC compliance, the IRS treats it as property for purposes of capital gains taxation.
  • SEC claims jurisdiction over all tokens that meet the “Howey” test laid out in SEC v. Howey Co., 328 U.S. 293 (1946)
  • SEC, William Hinman (Director, Division of Corporate Finance), Digital Asset Transactions: When Howey Met Gary (Plastic) (2018) [NB: this is not legally binding]
  • CFTC has also claimed jurisdiction over virtual currencies, saying they are commodities under the Commodity Exchange Act (CEA).
• IRS, Frequently Asked Questions on Virtual Currency Transactions (2019)

Nonprofit Regulations

• US Code, Subchapter F – Exempt Organizations (§§ 501 – 530)
• IRS, Charitable Organizations; Tax-Exempt Status for your Organization (Publication 557) (2019); Form 1023: Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code;
• Congressional Research Service, Nonprofit Donor Information Disclosure (Aug. 2019); An Overview of the Nonprofit and Charitable Sector (Nov. 2009)
• Non-profit entities are organized under state law, which varies.

Tax Regulations

• IRS, Charitable Contribution Deductions (2018)
• IRS, Determining the Value of Donated Property (Publication 561) (2007)
• IRS, Charitable Contributions: Substantiation and Disclosure Requirements (2016)
• IRS, Charitable Contributions (Publication 526) (2018)
• IRS, Notice 2014-21 (tax principles applying to virtual currency) (2014)
• IRS, Guidance Regarding Appraisal Requirements for Noncash Charitable Donations Notice 2006-96 (2006)
• IRS, Tax-Exempt Status for Your Organization (Publication 557) (2019)
• Congressional Research Service, Tax Issues Relating to Charitable Contributions and Organizations (Sept. 2019)
• IRS, Form 8949, Sales and other Dispositions of Capital Assets (2019)
• IRS, Public Disclosure and Availability of Exempt Organizations Returns and Applications: Contributors' Identities Not Subject to Disclosure (2020)
• IRS, Schedule B (Form 990, 990-EZ, or 990-PF) Schedule of Contributors (2019)
• IRS, Treasury and IRS issue proposed regulations and provide relief for certain tax-exempt organizations (Sept. 6, 2019)

Anti-Money Laundering Regulations

• Financial Access Task Force Report, Virtual Currencies: Key Definitions and Potential AML/CFT Risks (2014)
• Department of the Treasury Financial Crimes Enforcement Network, ​FIN-2013-G001​​ Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies (Mar. 2013)
• Department of the Treasury, Introduction to Treasury’s Updated Anti-Terrorist Financing Guidelines (2010); Protecting Charitable Giving: Frequently Asked Questions (2010); Risk Matrix for the Charitable Sector (2010)
• FDIC, Bank Secrecy Act, Anti-Money Laundering, and Office of Foreign Assets Control
• IRS, Bank Secrecy Act (2019)
• Department of the Treasury Office of Foreign Assets Control (OFAC), Economic Sanctions Enforcement Guidelines, 31 CFR Part 501 (2009)
• Department of the Treasury, Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities (2005)

Other Relevant Regulations, Sources, Notes

• Global Legal Insights, Blockchain & Cryptocurrency Regulation (2019), “USA”
• National Philanthropic Trust, The 2018 Donor Advised Fund Report
• Fidelity Charitable, Donating Bitcoin to Charity
• Ashley Pittman, The Evolution of Giving: Considerations for Regulation of Cryptocurrency Donation Deductions, 14 Duke Law and Technology Review 48-68 (2015)
• National Philanthropic Trust, The 2018 Donor Advised Fund Report
• Congressional Research Service, Virtual Currencies and Money Laundering: Legal Background, Enforcement Actions, and Legislative Proposals (Apr. 2019)
• CF Insights, A Scan of Community Foundations Accepting Cryptocurrency Gifts (Dec. 14, 2018)
• David Rosado, Cryptocurrency and the Community Foundation Field , Philanthropy News Digest Philantopic Blog (Jan. 29, 2019)
• Nonprofit TechScott Koegler, More Nonprofits are Considering Cryptocurrency as Part of Their Strategies, Nonprofit Technology News (Dec. 2, 2019)
• Sue E. Eckert with Kay Guinane and Andrea Hall, Financial Access for U.S. Nonprofits, Charity & Security Network (Feb. 2017)
• Jim Schaffer, The Promise and Risks of Receiving Appreciated Assets, Nonprofit Quarterly (Oct. 4, 2018)
• The Block, 12 percent of America's 100 biggest charity organizations accept bitcoin (Jan. 11, 2020)