Accepting cryptocurrency payments on your eCommerce website is a great way to tap into new markets and provide your customers with a wider range of payment options. But it’s still a relatively new technology, leading some businesses to worry that accepting crypto isn’t legal.
So we’ll cut through the noise: Yes, it’s perfectly legal for any business to accept crypto. But there are still regulations and guidelines you should be aware of.
We’ve put together the following answers to the most pressing questions owners have about whether it is legal to accept payments in crypto for their eCommerce business.
Are There Any Legal Issues Surrounding the Price Volatility of Crypto?
Bitcoin’s daily trading volume regularly hits hundreds of billions of dollars, with the whole crypto market capitalization often reaching trillions. It isn’t uncommon to see significant price shifts. Businesses worry that customers won’t be aware of the price they are paying for goods or will feel they are charged too much because of a lack of awareness about the underlying volatility of crypto prices.
This is all resolved by how your eCommerce platform integrates with your crypto platform. When customers check out, they are presented with the current calculation of the price of their goods at the current going rate in the chosen currency. Regardless of how that price changes in the future, the rate calculated will be the publicly posted value at the moment they check out.
Is It Legal to Pay for Goods and Services with Crypto?
Yes. In fact, using crypto to pay for daily business expenses is a great way to utilize your funds, as transactions are quick, easy, and inexpensive.
What Are the Tax Implications of Taking Crypto Payments?
Be sure to stay plugged into crypto news surrounding tax rules, which develops over time. For now, crypto is treated as income tax when you are paid for goods or services. If you convert your crypto payment to another cryptocurrency, use it to pay for goods or services (like shipping your products with Bitcoin Postage, for instance), or convert it to fiat (USD), it is treated as capital gains.
It’s your job to record sales and their dollar value and discuss the right forms to use with your tax advisor.
What Legal Concerns Should I Have Regarding Security and Privacy with Crypto?
Any online business that handles customer transactions must consider the customer’s safety when transacting online. With credit cards, debit cards, and digital payments like PayPal, transactions are encrypted and take place directly between the user and the payment processor or payment gateway.
If customers create an account on your site that includes personally identifiable information or financial details, you may share responsibility with your server provider, depending on their terms and policies. Rules regarding regulatory compliance for storing or transmitting customer details include cybersecurity and privacy laws that differ from one industry to the next, but they all hold a high standard.
Crypto payments are, in many ways, even more secure than traditional payment encryption, and the actual crypto transaction itself does not store any personal data about the customer.
Be sure to speak with a legal advisor to ensure you follow the required precautions with all aspects of your site and business. As far as crypto goes, you shouldn’t have any additional legal issues to worry about if you’re using eCommerce plugins, payment gateway, and processor features correctly.
Certain federal regulations require you to share your personal details with the platform you choose for your crypto account. That platform is required to follow Know Your Customer (KYC) and anti-money laundering (AML) guidelines. You must provide them with accurate data when signing up and if requested in the future.
How Hard Is It to Set Up Crypto Payments on My eCommerce Site?
There are challenges to overcome when setting up your eCommerce website to accept crypto payments, but it’s not nearly as hard as it used to be. Chances are, you already use a plugin or third-party app to process credit card payments; you’ll add a similar setup to accept crypto. That plugin will connect to your payment gateway and payment processor.
The easiest way to ensure payments are processed quickly and accurately is to use a business crypto account that handles processing and conversions to and from fiat while including your crypto wallet.
Fortunately, none of the legal requirements for accepting crypto payments make it more difficult to get crypto payments running on your site.
What Federal and State Regulations Should I Be Aware of?
Specific regulations will change over time—especially at the state level.
State Regulations
Crypto laws vary from state to state, but it’s currently legal for businesses to buy and sell goods with crypto in all 50 states. That includes converting cryptocurrency to and from fiat money. Stay up-to-date about crypto laws in your state, as they may change over time.
Federal Regulations
There are numerous federal agencies in charge of oversight for regulations that include cryptocurrencies, along with acts that determine the course for enforcement, including:
- The Internal Revenue Service (IRS): The IRS enforces the collection of taxes, so how it views crypto is central to your business. Currently, crypto is considered a commodity and property. This makes it a taxable event when crypto is sold for fiat or used to buy or sell goods. When a customer pays you in crypto, you report taxes on that payment the same as fiat, treating it as income tax.
- The Securities and Exchange Commission (SEC): The SEC oversees the issuance and sale of securities and has been at the center of the most controversial aspects of cryptocurrency regulation. Thus far, the top cryptocurrencies have been defined as commodities and are treated like property; this distinction helps make crypto safe and easy to use for businesses. The SEC oversees exchanges and wallet providers, so the agency is always central to discussions about the right for individuals and companies to own and use crypto wallets. You should be in good shape if you stick to reputable crypto account platforms as your payment gateway, processor, and wallet. As always, check with a professional advisor.
- Financial Crimes Enforcement Network (FinCEN): FinCEN detects and prosecutes financial crimes and money laundering.
- Commodity Futures Trading Commission (CFTC): The CFTC enforces rules regarding crypto derivative markets to prevent trading fraud.
- The Bank and Secrecy Act (BSA): The BSA establishes a standard for verifying the identity of people sending and receiving payments, including crypto payments. Anti-money laundering (AML) and Know Your Customer (KYC) regulations require crypto account providers to verify identities and keep those records on file.
Use Your Crypto to Pay for Shipping
Hopefully, the above answers will help instill confidence in joining the proud family of businesses accepting crypto payments. Bitcoin Postage loves playing a role in building a community of crypto-friendly businesses.
When you use our services to pay for shipping with crypto, you’re helping to prove that cryptocurrency is a viable solution to strengthen online privacy rights and that decentralized transactions truly are the future.