A cryptocurrency, crypto-currency, or crypto is a collection of binary data which is designed to work as a exchange medium.
Individual coin ownership records are stored in a digital ledger which is a computerized database using powerful cryptography (The process of converting ordinary plain text into unintelligible text and vice-versa, a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it. Cryptography not only protects data from theft or alteration, but can also be used for user authentication. ) in order to to secure transaction records, to control the creation of additional coins, and also to verify the transfer of coin ownership.
What It Isn’t
Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority such as a central bank.
Cryptocurrencies typically use what is known as decentralised control as opposed to a central bank digital currency
Cryptocurrency & The Blockchain
When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized.
When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, usually a blockchain that serves as a public financial transaction database for the coin in question
A cryptocurrency is a tradable digital asset or digital form of money, built on blockchain technology that only exists online.
Cryptocurrencies use encryption to authenticate and protect transactions, hence their name.
There are currently over a thousand different cryptocurrencies in the world, and their supporters see them as the key to a fairer future economy.
Cryptocurrency & The Law
The legal status of bitcoin (and related crypto “instruments” ) varies substantially from state to state and country to country, and is still undefined or changing in many of them. Whereas, in the majority of countries the usage of bitcoin isn’t in itself illegal, its status and usability as a means of payment (or a commodity) varies, with differing regulatory implications.
While some states have explicitly allowed its use and trade, others have banned or restricted it. Likewise, various government agencies, departments, and courts have classified bitcoins differently.
The US Treasury classified bitcoin as a convertible decentralized virtual currency in 2013.The Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity in September 2015. The IRS states that bitcoin is taxed as a property.
Bitcoin was mentioned in a Supreme Court opinion (in the case of Wisconsin Central Ltd. v. United States) regarding the changing definition of money on 21 June 2018.
In 2018 FinCEN director Kenneth Blanco said that money services businesses, including cryptocurrency exchanges, money transmitters, and anonymizing services (known as “mixers” or “tumblers”) do a substantial amount of business in the U.S., according to, they are required to:
- Register with the U.S.FinCEN as a money services business.
- Design and enforce an anti-money laundering (AML) program.
- Keep appropriate records and make reports to FinCEN, including Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs).
In September 2016, a federal judge ruled that “Bitcoins are funds within the plain meaning of that term”
US Law Firm Holland & Knight has published the following free access article if you wish to dig deeper into legal definitions.
Blockchain & Cryptocurrency Laws & Regulations 2022