2018 was the year the US SEC really cracked down on ICOs. First a few of the totally fraudulent ones.[1] Then, anything that looked like a security offering.[2]

The IRS has been gradually upping the pressure. Form 1040 for 2020 included, for the first time on the main form, the question "At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?" The IRS has access to Know Your Customer data from many crypto exchanges, so, anyone who checks "No" and has a crypto exchange account will get attention. Here's a history of the IRS slowly tightening its grip on cryptocurrencies.[3]

[1] https://www.sec.gov/news/press-release/2018-53

[2] https://finance.yahoo.com/news/sec-brings-ico-crackdown-open...

[3] https://hub.accointing.com/our-crypto-platform/report-taxes/...

Right, I understand that can appear to be tightening, but the IRS guidance is exactly the same since 2014, as are the penalties. They're now more actively alerting US taxpayers they need to pay taxes on their "virtual currencies." But the US taxpayer has always had that obligation, and the IRS is now starting to more visibly enforce it. They've been doing so less visibly as well. With so much more digital asset economic activity, there's that much more taxation, and that much more enforcement. The code is the same.

American crypto exchanges were actually reporting predating that announcement; they had to in order to not get shut down. Thoughtful people knew that certain regulation would have to be met from the beginning, but that memo wasn't universal and there's no one who goes door to door with the facts for hungry home speculators. There's likely to be a continual wave of retroactive enforcement for some time. That's why most sincere people in the space have been paying any required taxes generated by their activity starting for the year 2015 at the latest.

Incidentally, bitcoin hasn't been considered a security by the IRS yet, but the infrastructure bill that just passed has a whole sea change of new regulation for the space. I don't feel I've been informed well enough yet to comment much regarding macro implications. But there is something in there that could effect the latest buzzwords to go media viral: NFTs. Securities-related Know Your Counterparty and Anti-Money Laundering regulations that will be in effect starting in 2023 may apply to NFT sales, for any seller. That could have a real impact. You would need the EIN or social security number of your buyer.

We could call this tightening or a crackdown, but I think it also might be fair to call it reigning things in to prevailing standards. I don't really know. All this revolves around interesting questions about how the standards continue to be established for what constitutes a digital security vs digital property/currency.

As to the ICOs crackdown, it was nice to see regulators actually take real action on straightforward and often inept securities fraud. They were enabled by capability advances that weren't as feasible with bitcoin alone. They were old grifts cycled around again for a round of digital "innovation," so they were nipped in the bud pretty quickly. These kinds of fraud will probably spring up at every stage of the digital asset technology development cycle. The noise can be a bit maddening, and I can understand your general sentiment.

Rules don't matter. Enforced rules do.

If IRS only started tightening their grip in 2020... Their statements prior to 2020 didn't have any effect, yet.

I'm not saying "it's doom and gloom for crypto". I'm saying it's fair to claim things didn't fully play out yet.

Yes. It's pretty clear that forward looking NFTs are securities under US law, per the Howey test. The NFT community is in total denial about this.

The SEC is basically reactive. They wait until people complain about losing money in a scam. Then they bring the hammer down. This avoids complaints about over-regulation.

(A "forward looking NFT" is something like land in a virtual world that doesn't exist yet. You're funding an enterprise run by others to build the thing. That's an investment contract, which the SEC regulates. An NFT that represents "art" that exists at the moment of sale is probably just a collectable.)

By the way, none of this is new. See "Swampland in Florida" on Wikipedia for the 1950s version of the same concept.

That's true, except they have been enforcing and building the capabilities to enforce at a larger scale. They can enforce going back decades, are called in constantly to help other investigations and prosecutions, and are in no rush.

It's just like everything else, literally, and tax evasions only get media coverage under pretty limited circumstances.

Taxation in the space has always had a foregone conclusion that some have chosen to handwave or rationalize away. Not a bright strategy IMO.

Meh, the exchanges used to buy/sell NFTs will just add KYC and it will be business as usual IMO.

Regardless of Bitcoin itself, it seems the US has started looking at Federal regulation of stablecoins only this year. The way it looks to me, the existence of wildcat stablecoins are an important pillar keeping the crypto economy afloat. Just this week Tether was seen printing billions again, just as Bitcoin started going south.

Tether has a lot of people worried. It's a big enough issue to have reached Cabinet level. Tether now has US$76 billion outstanding. This can't end well.