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Act does not stop with the obvious and commonplace. 344, 351 (1943). It has also been said that “Congress’ purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called.” Reves v. Ernst & Young, 494 U.S. Joiner Leasing Corp., 320 U.S. Novel, uncommon, or irregular devices, whatever they appear to be, are also reached if it be proved as matter of fact that they were widely offered or dealt in under terms or courses of dealing which established their character in commerce as ‘investment contracts,’ or as ‘any interest or instrument commonly known as a ‘security’.” SEC v. C.M.

Democratic Senator Patrick Toomey introduced a bill that would create a regulatory framework for stablecoins and their issues, currently known as the Toomey Stablecoin Bill. This bill includes authorizing three options for the issuance of payment stablecoins (national limited payment stablecoin issuers, insured depository institutions and money transmitting businesses), subjecting all payment stablecoin issuers to standardized requirements, distinguishing stablecoins from securities by indicating that, at a minimum, stablecoins that do not offer interest are not securities, and applying privacy protections to transactions involving stablecoins and other virtual currencies.

The IRS also concluded, however, that a taxpayer does not have gross income as a result of a hard fork if it does not receive the new cryptocurrency. In November 2021, President Biden signed into law the Infrastructure Investment and Jobs Act (“IIJA”), which will require digital asset brokers to report to the IRS digital asset transactions valued at more than $10,000. The IRS further concluded that when the taxpayer obtained “dominion and control” over the Bitcoin Cash would determine, for tax purposes, its date of receipt and the determination of its fair market value. The IRS concluded that a taxpayer who received Bitcoin Cash as a result of the hard fork had realized gross income.

For an individual filing a federal income tax return, the gains or losses from a sale of virtual currency that was held as a “capital asset” (i.e., for investment purposes) are reported on (i) Schedule D of IRS Form 1040, and (ii) IRS Form 8949 (Sales and Other Dispositions of Capital Assets). Any realized gains on virtual currency held for one year or less as a capital asset by an individual are subject to ordinary income tax rates. Any realized gains on virtual currency held for more than one year as a capital asset by an individual are subject to capital gains tax rates.