Key Takeaways
- The US has no single comprehensive crypto law — regulation is split between the SEC, CFTC, FinCEN, OCC, and state regulators.
- FIT21 (passed House 2024) would resolve the SEC/CFTC jurisdiction question by classifying tokens as securities or commodities based on decentralisation.
- The GENIUS Act (advancing in Senate 2025–2026) establishes the first federal framework for payment stablecoins.
- A new crypto-friendly administration has significantly reduced enforcement pressure and opened pathways for legislative clarity.
Why US Crypto Law Is So Complex
Unlike the EU's comprehensive MiCA regulation or Switzerland's unified FINMA framework, US crypto law is fragmented across multiple federal agencies with overlapping and sometimes conflicting jurisdictions. This fragmentation stems from the fact that crypto assets do not fit neatly into any pre-existing regulatory category — they can simultaneously resemble securities, commodities, currencies, and payment instruments depending on how and by whom they are used.
The agencies most relevant to crypto include: the SEC (securities law, investor protection), the CFTC (commodities and derivatives), FinCEN under the Treasury Department (anti-money laundering), the OCC (national bank charters and fintech), the Federal Reserve (payment systems and bank involvement in crypto), and individual state regulators (money transmission licences, BitLicence).
A Brief History: US Crypto Regulation Timeline
| Year | Development |
|---|---|
| 2013 | FinCEN guidance: virtual currency exchangers and administrators are money services businesses subject to BSA/AML rules |
| 2015 | New York BitLicence: first state-level comprehensive crypto business regulation; widely criticized as overly burdensome |
| 2017 | SEC DAO Report: tokens issued via ICO can be securities; begins era of SEC crypto oversight |
| 2018 | CFTC asserts jurisdiction over Bitcoin and Ether as commodities; brings first crypto manipulation cases |
| 2020 | SEC sues Ripple for $1.3B unregistered securities offering; OCC permits banks to hold crypto as custodians |
| 2021 | Infrastructure Investment Act: crypto broker reporting requirements; first Bitcoin futures ETF approved |
| 2022 | FTX collapse: congressional urgency for crypto legislation intensifies; SEC and DOJ bring multiple major cases |
| 2023 | Ripple partial victory; SEC sues Coinbase and Binance; Grayscale court win forces ETF reconsideration |
| 2024 | Spot Bitcoin ETFs approved (Jan); FIT21 passes House (May); Spot Ethereum ETFs approved (May) |
| 2025 | New administration drops major enforcement cases; Strategic Bitcoin Reserve established; GENIUS Act advances in Senate |
| 2026 | Comprehensive digital asset legislation under negotiation; SEC broker-dealer rules for crypto advancing |
The SEC vs CFTC Jurisdiction War
The most consequential unresolved question in US crypto law is which regulator has primary jurisdiction over digital asset markets. The SEC claims authority over tokens that are securities (under the Howey test); the CFTC claims authority over tokens that are commodities and their derivatives. Both agencies have asserted jurisdiction over Bitcoin and Ethereum, creating a dual-regulatory environment that frustrates industry participants.
The practical implications are significant. If a token is a security, it must be registered with the SEC; the exchange listing it must register as a securities exchange or ATS; and broker-dealers handling it face FINRA oversight. If a token is a commodity, it is largely unregulated in spot markets (the CFTC only has anti-fraud authority over commodity spot markets, not registration authority), with only its futures and derivatives subject to CFTC oversight. Most crypto companies prefer commodity classification for this reason.
FIT21: The Financial Innovation and Technology for the 21st Century Act
FIT21 is the most significant piece of US crypto legislation to advance through Congress. Passed by the House with bipartisan support in May 2024 (279–136), it represents the first comprehensive statutory attempt to classify digital assets and define regulatory jurisdiction. Key provisions:
FIT21 Key Provisions
- Decentralisation test: A token is a "digital commodity" (CFTC jurisdiction) if its blockchain is "sufficiently decentralised" — no single entity controls more than 20% of supply and no affiliated persons control the protocol. Until decentralisation is certified, tokens are treated as securities (SEC jurisdiction).
- Registration pathways: Provides clear registration regimes for both security tokens and commodity digital assets, reducing the grey zone that has driven regulatory uncertainty.
- Retail protections: Disclosure requirements for retail investors in digital commodity markets, analogous to securities law disclosure obligations.
- DeFi provisions: Excludes truly decentralised protocols from certain requirements while preserving customer protection rules for centralised interfaces.
As of 2026, FIT21 has not yet been signed into law — the Senate version is being negotiated with modifications. Analysts expect a merged bill to advance during the current Congress, potentially creating the most significant shift in US digital asset regulation since FinCEN's 2013 guidance.
The GENIUS Act: US Stablecoin Regulation
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act passed the Senate Banking Committee in March 2025 with bipartisan support and is advancing toward a Senate floor vote in 2026. It establishes the first federal framework specifically governing payment stablecoins:
- Issuer eligibility: Only insured depository institutions, national bank trust subsidiaries, or federally approved nonbank issuers may issue payment stablecoins.
- Reserve requirements: 1:1 backing with US dollars, short-term Treasuries, or central bank reserves. Monthly public reporting of reserves required.
- Redemption rights: Holders must be able to redeem at par within a short timeframe; issuers must hold liquid assets sufficient to meet redemption demands.
- AML/KYC: Stablecoin issuers subject to BSA obligations as money services businesses.
- Algorithmic stablecoins: A two-year moratorium on new "endogenously collateralised" stablecoins (i.e., those backed primarily by the issuer's own tokens, like UST).
If enacted, the GENIUS Act would provide regulatory certainty for USD-pegged stablecoins — a critical infrastructure layer for crypto payments, DeFi protocols, and institutional settlement. It is widely seen as the most likely piece of crypto legislation to be signed into law before the end of 2026.
State-Level Regulation: BitLicence and Beyond
In the absence of comprehensive federal law, state regulators have filled some of the gap. New York's BitLicence, introduced in 2015 under the Department of Financial Services (DFS), remains the most demanding state-level crypto business licence — requiring capital minimums, cybersecurity audits, compliance programmes, and DFS approval for new product launches. Several major exchanges (Binance, Kraken) have historically avoided doing business with New York residents due to the cost of BitLicence compliance.
By contrast, Wyoming has positioned itself as the most crypto-friendly US state, enacting the Special Purpose Depository Institution (SPDI) charter, which allows crypto companies to offer banking services without federal FDIC insurance. Kraken became the first company to obtain an SPDI charter in 2020. Other states — Texas, Florida, Colorado — have passed legislation creating favourable environments for crypto mining, DeFi development, and digital asset custody.
Compliance Guide: What US Crypto Businesses Need to Know in 2026
For businesses operating in or targeting the US market, the current compliance landscape requires attention to the following:
- Token classification: Determine whether your token is likely a security or commodity before launch. Consider obtaining a legal opinion or filing for a no-action letter with the SEC. Under the current administration, the SEC has been more willing to engage informally with issuers.
- Money transmission licences: Any business that holds or transmits funds on behalf of customers — including crypto exchanges, custodians, and payment processors — typically needs state money transmission licences in each state where it operates. The process varies by state and can take 12–18 months.
- AML/KYC programme: All crypto businesses serving US customers must comply with Bank Secrecy Act obligations: customer due diligence (CDD), suspicious activity reporting (SAR), and transaction monitoring. FinCEN's travel rule requires passing counterparty information for transfers above $3,000.
- Tax reporting: The Infrastructure Investment and Jobs Act (2021) expanded crypto broker reporting requirements (Form 1099-DA, effective 2025). Platforms with US customers are required to report customer gains and losses to the IRS, mirroring equity brokerage reporting obligations.
The trajectory of US crypto law points toward greater regulatory clarity over the next 12–24 months. FIT21 and the GENIUS Act, if enacted, would resolve the most significant sources of uncertainty — jurisdiction and stablecoin regulation — and position the US as a clearer destination for digital asset businesses that have been operating offshore or avoiding the US market.