Many small business owners have noticed the rise in cryptocurrency transactions lately and have wondered if that is right for them. They have heard plenty of benefits but also know that crypto brings risks. If you're among this group, here are some answers to frequently asked questions that can help you make the right decision for your company about cryptocurrency and businesses.
1. What Is Crypto?
Crypto is a digital currency generally not representative of US or foreign dollar values. The name comes from the original crypto, Bitcoin, which used cryptography to make digital transactions secure by recording them all on a digital ledger via blockchain technology. While blockchain is still used in many bitcoin types, newer technologies are also available.
You will generally purchase coins when you buy crypto for your small business. With some currencies, you can purchase one coin for about a dollar, and others will have you paying high rates. You can then use them to make transactions, just like with regular money, and any time the coins change hand, they will be recorded in those digital ledgers.
2. Are Transactions Covered by Anti-Money Laundering Laws?
Transactions made with crypto are covered by anti-money laundering laws and the Bank Secrecy Act. That means they are subject to reporting requirements, such as regular money. If you're struggling to understand these financial laws or need to know more about reporting requirements, the Small Business Administration is your best place for information.
3. Is There Federal Legislation for It?
So far, the federal government has primarily left regulations and restrictions of crypto to regulatory agencies rather than giving specifics on cryptocurrency and businesses. However, they did form a caucus to discuss it and other types of blockchain technology in 2016. Unfortunately, this was not very productive, although Congressional interest in creating legislation for crypto seems to be growing.
4. Are There State Laws for It?
Instead, states have taken up the slack and are creating laws surrounding crypto, from BTC to USDT transactions, payment regulations, and more, although these are often vague. For example, Alabama requires anyone who sells, stores, or receives crypto to have a license. That is due to their laws defining crypto as falling under the category of an item with monetary value. Alaska has a similar policy.
Some states, such as Arizona, don't specifically define crypto as something that requires a monetary value. Therefore, many companies that sell crypto do not have a license to operate in that state. Meanwhile, other places such as Arkansas expressly state cryptocurrency in their laws. That said, Arkansas state laws do not require anyone selling, storing, or receiving crypto to have a license for that type of currency.
These are just some of the basic facts about cryptocurrency and businesses. You should know a good bit about crypto before you start using it within your business operations. Otherwise, you could end up over your head and unsure how to handle the crypto you have purchased or now accept. Hopefully, this information has helped you decide whether it is a good idea for you or not.