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Cryptocurrency laws and regulations

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Cryptocurrency laws and regulations

Overview of regulations, how they’re regulated, key challenges, and more resources for legal professionals

Legal terms · Securities law · Cryptocurrency laws

The expansion of virtual currencies like Bitcoin and Ethereum has put U.S. regulators in a dilemma between encouraging innovation and safeguarding investors.

The evolution of cryptocurrency is primarily due to the rise in technology worldwide. It has pushed financial boundaries, leaving with the possibility that cryptocurrencies may become the central element of the global economy.

The significance and impact of the use of cryptocurrency in the U.S. highlights the need to regulate it. However, there is a challenge in establishing a clear policy framework. With the digital revolution taking place through cryptocurrency, the state and federal governments are trying to determine how to define their role in regulating this new asset class in the best way possible.

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What is cryptocurrency?


What is cryptocurrency regulation?


How is cryptocurrency regulated?


State regulations

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International Standard-Setting Bodies


Challenges in the US crypto regulation

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What is cryptocurrency?

Cryptocurrency is a type of digital money that is a decentralized digital asset designed as a medium of exchange, utilizing cryptographic protocols to regulate the creation of new units. It exists only online and is not controlled by any government, central bank, or authority.

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A digital or virtual currency that is not issued by any central authority, is designed to function as a medium of exchange, and uses encryption technology to regulate the generation of units of currency, to verify fund transfers, and to prevent counterfeiting.

Black’s Law Dictionary

(12th ed. 2024)

Cryptocurrency uses a secure technology called cryptography to keep transactions safe and verify fund transfers to prevent fraud. It operates on a decentralized system and transactions are recorded on a public ledger called blockchain. The regulatory treatment of cryptocurrency varies across jurisdictions, with legal considerations encompassing anti-money laundering compliance, securities laws, taxation, and consumer protection frameworks.

What is cryptocurrency regulation?

Crypto regulations are the legal rules and guidelines that are present and issued by governments to shape how digital assets such as virtual currency operate. These laws have varied approaches across nations.

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In the U.S., there are various states wherein some are friendly towards market participants embracing crypto with clear regulations, while others ban it outright.

Around 60 percent of U.S. citizens lack confidence in cryptocurrency trading or investment, considering the existing systems to be unreliable or unsafe. One primary reason for this distrust may be the absence of a single, consistent set of laws to regulate cryptocurrencies.

The existing regulations range from covering everything about how cryptocurrencies are to be created and traded to how they interact with traditional financial systems. Well-defined rules can help the crypto market in the following ways:

  • Help in protecting investors from scams and market manipulation
  • Ensure that there is transparency in the transaction, along with accurate information
  • Help prevent illegal activities like money laundering, fraud, misleading information, etc
  • Clarify the tax rules that apply to digital currencies
  • Encourages market participation and confidence in the investors while encouraging blockchain innovation
  • Regulates the risks that are or may be associated with the transactions

How is cryptocurrency regulated?

No defined regulation is used to regulate cryptocurrency in the U.S. as of 2025.

However, a major crypto legislation was introduced in 2024, i.e. the Financial Innovation and Technology for the 21st Century Act (or FIT21), that has been passed by the U.S. House of Representatives but has not yet been enforced. The legislation is aimed at emphasizing the role of the Commodity Futures Trading Commission (CFTC) as a lead crypto regulator in the U.S.

In the absence of one framework for cryptocurrency, the authorities try to regulate and enforce the already existing laws both at the federal and state levels, which are as follows.

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Federal regulations

At the Federal level, regulations have predominantly dealt with various administrative agencies and bureaus.

The Securities and Exchange Commission (SEC)

The SEC primarily deals with securities such as convertible notes, stocks, debentures, etc. They aim to protect investors through mandatory registration of the securities that qualify for it.

The SEC brought lawsuits against major platforms such as Coinbase, Binance, Kraken, etc, for violation of regulations.

Due to the difference between the cryptocurrency and securities, a judicial split emerged in 2023, with Southern District of New York (SDNY) Judge Torres ruling in SEC v. Ripple Labs that only the institutional sales of XRP were securities, while Judge Rakoff in SEC v. Terraform Labs held that Terraform’s UST stablecoin was a security.

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Courts remain divided on this issue at the time of this writing.

Commodity Futures Trading Commission (CFTC)

CFTC is a federal agency that is tasked with regulating U.S. commodities and derivative markets.

The CFTC regulates cryptocurrencies as commodities under the Commodity Exchange Act and has developed jurisdiction in derivative markets, all of which are set forth in decisions such as CFTC v. McDonnell (2018) and CFTC v. My Big Coin Pay (2018), etc.

In 2017, the CFTC introduced a self-certification process for bitcoin futures which allowed exchanges to launch crypto derivatives. For enforcement measures, the CFTC has engaged in high-profile enforcement matters against Uniswap, Binance, Celsius, Ooki DAO, and secured an order against defaulted FTX to pay a penalty of $12.7 billion.

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Internal Revenue Service (IRS)

Since 2014, the IRS has treated cryptocurrency as a digital representation of value which is different from a representation of the U.S. dollar or any other real currency. It functions as a unit of account, a store of value, and a medium of exchange.​

Being categorized as property makes each sale, trade, or buying of cryptocurrency taxable under capital gains taxes like stocks or property. Regardless of whether one incurs profit or loss, correct reporting of the same must be done according to the IRS.

US Department of the Treasury’s Financial Crimes Enforcement Unit (FinCEN)

FinCEN was the first U.S. federal regulator to address cryptocurrency, by issuing guidance back in 2013.

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It governs virtual currency businesses and wallet services as Money Services Businesses and mandates them to have anti-money laundering and counter-terrorism financing regulations, specifically on Money Services Businesses dealing with Convertible Virtual Currency.

US Department of the Treasury’s Office of Foreign Assets Control (OFAC)

OFAC is a regulatory agency that administers and enforces U.S. economic and trade sanctions to maintain national security and foreign policy interests.

These sanctions target countries, terrorists, narcotics traffickers, and other threats including those involved in cryptocurrency activities. OFAC applies the same sanctions compliance standards to transactions involving digital assets as it does to those involving traditional currency.

U.S. Department of Justice (DOJ)

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In October 2021, the DOJ created the National Cryptocurrency Enforcement Team (NCET) to enhance its investigative resources to control criminal activity in the crypto environment.

The DOJ has been involved in several high-profile cases and has even charged the crypto market with insider trading, including against former Coinbase exchange employees.

Federal Deposit Insurance Company (FDIC)

After issuing joint prudential crypto releases in November 2021, the FDIC instructed all FDIC-supervised institutions in April 2022 to notify if they were conducting crypto business or intended to engage in it. This was required so the FDIC could review the information provided.

Federal Reserve Board (FRB)

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FRB supervises the banking institutions and banking activities.

It issued reports on stablecoins and central bank digital currency in January 2022. After that jointly in 2023, with FDIC and OCC, the FRB released two statements on the risks that are associated with crypto assets and the participants.

The FRB also issued supervisory guidance requiring banks under its oversight to notify their lead supervisory contact before engaging in crypto-asset activities.

State regulations

Financial regulators for cryptocurrency at the state level are as follows:

New York State Department of Financial Services (NYDFS)

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In contrast to other crypto regulations that have been prominently adopted by other states, New York has a different regime that is focused on customer protection.

It was the first comprehensive crypto regulatory regime among major U.S. states which led the way by introducing the concept of BitLicensees — used to self-certify the listing or adoption of new virtual currencies. However, it is generally considered to be prohibitive and burdensome by the market participants.

California Department of Financial Protection and Innovation (DFPI)

On one hand, the DFPI has shown a friendly approach to the crypto market participants providing a narrow reading of state licensing requirements. On the other hand, it has implemented a comprehensive state crypto regulatory framework.

State attorneys general, including the New York State Attorney General (NYAG)

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NYAG is one of the crypto regulators in the U.S. that has actively participated in filing charges and settling with the crypto platforms and market participants of all sizes.

International Standard-Setting Bodies

There is a constant rise in the involvement of digital currency transactions around the world, which often lightens the line between the borders as well.

Now, given the evolving complexities of digital asset markets, several prominent international financial standard-setting bodies have undertaken initiatives to regulate cryptocurrencies and make sure that they are regulated across jurisdictions.

Bank for International Settlements (BIS)

BIS acts as the central bank, and therefore it plays a role in shaping the regulatory framework for Central Bank Digital Currencies and stablecoins. BIS has issued various reports on stablecoin arrangements.

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Basel Committee on Banking Supervision (BCBS)

BCBS is the primary global standard-setting body for prudential bank regulation, which has developed a framework to govern the exposure of banks to crypto assets.

Financial Stability Board (FSB)

The FSB contains the regulatory, supervisory, and oversight recommendations for crypto-asset markets which establishes high-level global standards for crypto regulation.

Financial Action Task Force (FATF)

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FATF is a global authority on anti-money laundering and counter-terrorist financing, it has issued extensive guidance on mitigating illicit finance risks in the crypto sector.

3 Key challenges

Cryptocurrency regulation in the U.S. presents significant challenges due to its fragmented nature, requiring businesses to comply with a complex framework of overlapping and, at times, conflicting federal and state laws.

  1. ​Since each state has different regulations, it makes nationwide operations difficult.
  2. Money transmitter licensing rules differ across states, which may be friendly or strict, making compliance restrictive and complex.
  3. There is a lack of clear crypto-specific laws which forces businesses to interpret existing financial regulations in different ways, leading to uncertainty and misinterpretation.
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Interactive Brokers Unleashes Stablecoin Rails, Slashes Crypto Trading Costs

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Interactive Brokers Unleashes Stablecoin Rails, Slashes Crypto Trading Costs

Key Takeaways

Interactive Brokers (Nasdaq: IBKR), the automated global broker that manages approximately $930.3 billion in client equity as of mid-2026, integrated these capabilities directly into its core electronic trading architecture. Clients can now execute automatic conversions to withdraw U.S. dollars from their brokerage accounts directly into external destinations, including personal non-custodial cryptocurrency wallets, using Circle’s USDC, Paypal’s PYUSD, or Ripple’s RLUSD.

This infrastructure upgrade bridges traditional finance (TradFi) markets and digital currency networks without requiring investors to switch between separate applications. By allowing near-instantaneous transfers 24 hours a day, including weekends and holidays, the firm ensures that market participants can move capital onto the platform and begin trading across 170 global markets within minutes.

Redefining Brokerage Cost Structures

“We believe digital assets should be integrated into a client’s broader financial experience, not treated separately,” explained Milan Galik, Chief Executive Officer of Interactive Brokers. Galik emphasized that as stablecoins become a more widely used method of payment and transfer, the firm remains focused on providing seamless digital asset access alongside a diverse range of global products.

The institutional expansion addresses a critical friction point for high- volume traders who frequently contend with steep transactional overhead on specialized crypto exchanges. Interactive Brokers charges crypto commissions starting between 0.12% and 0.18% of total trade value, featuring a modest $1.75 minimum per order. Crucially, the broker imposes no added spreads, markups, or custody fees, undercutting conventional competitors by up to 85%.

Industry data reveals that recently launched crypto offerings from traditional brokerages charge client commissions as high as 0.75% per transaction. Alternative platforms often remain two to four times more expensive, with some retail applications charging up to 1.20% or more. By maintaining low overhead, IBKR leverages its $21 billion consolidated equity capital to aggressively capture market share from standard spot exchanges.

Token Expansion and Custodial Pipelines

Tuesday’s Interactive Brokers crypto expansion routes new asset classes through separate regulated pipelines to guarantee institutional-grade compliance and security. Through its partnership with Zero Hash, the broker added Aave, Aptos, Canton, Lido DAO, Monad, NEAR Protocol, Plasma, Pax Gold, and Uniswap. The addition of Pax Gold provides a digital token backed entirely by physical gold stored in professional vault facilities.

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Concurrently, Paxos Trust Company will facilitate trading for three of these newly supported assets, specifically AAVE, UNI, and PAXG. These choices join an existing institutional catalog that already includes high- liquidity crypto assets such as bitcoin, ethereum, solana, bitcoin cash, litecoin, and XRP. This dual-vendor model minimizes counterparty risks for the firm’s rapidly growing base of 5.185 million client accounts.

Interactive Brokers (Nasdaq: IBKR) shares on July 14, 2026.

This strategic development coincides with a period of massive operational growth, as the firm’s Daily Average Revenue Trades recently surged 53% year-over-year to 5.269 million. Margin loan balances also climbed 67% to $108.5 billion, highlighting a highly active client base that utilizes capital leverage across unified portfolios. The addition of crypto flexibility serves as an onboarding tool for sophisticated international investors.

Regulatory Guardrails and Global Availability

While the expansion enhances utility for domestic accounts, strict geographic limitations remain firmly in place due to fragmented cross-border regulatory frameworks. Bidirectional funding via stablecoin is entirely unavailable to clients registered under Interactive Brokers U.K. Limited or Interactive Brokers Ireland Limited. Furthermore, the newly introduced crypto-assets cannot be accessed by clients of the Irish affiliate.

Corporate executives maintained a realistic, risk-managed tone regarding broader market conditions, explicitly stating that digital asset trading carries exceptional financial danger. The platform noted that these specific digital products are designed exclusively for individuals with high risk tolerance and the financial capacity to sustain total capital losses. This conservative positioning aligns with the firm’s corporate credit profile and S&P rating of A- with a stable outlook.

As digital and TradFi continue to converge through tokenization and institutional investment vehicles, Interactive Brokers positions its balance sheet as a primary clearing house. The elimination of separate wallet ecosystems reduces operational friction for hedge funds and independent money managers alike. This long-term framework underpins the broker’s overarching strategy to capture institutional wallet share as the digital currency landscape matures.

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Why Early Legal Action Matters After a Cryptocurrency Investment Scam

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Why Early Legal Action Matters After a Cryptocurrency Investment Scam

Pig butchering scams do not start with crypto. They start with a conversation. Someone reaches out through a dating app, a text, or social media, and over weeks or months they build what feels like a genuine connection. They ask about your life and your goals.

At some point they mention a crypto platform that has been generating strong returns. They help you set up an account, walk you through the first deposit, and show you a dashboard with what looks like real profit. You put in more. The numbers climb. Then the platform locks you out or disappears, and the money is gone.

If this has happened to you, the most important thing is to move quickly. A crypto fraud lawyer can help you figure out what to do next and which legal options may still be available.

Immediate Steps After Discovering the Scam

Scammers count on the shock to buy them time. Most victims spend the first few days trying to understand what happened instead of acting, and that delay allows evidence to disappear and funds to move further out of reach.

The First 72 Hours

The first three days matter more than most people realize. Scammers do not sit still after taking money. They rotate wallet addresses, shut down platforms, and often keep pressuring the victim to send more under the guise of fees or tax payments needed to release returns that never existed.

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Getting a lawyer involved early can cut through the confusion. They identify which wallets and platforms were involved, send notices to banks and exchanges, and start building a timeline while everything is still fresh. The window for certain recovery options is narrow, and even a week of delay can close off paths that were open on day one.

Securing Accounts and Devices

While the legal side gets underway, lock down every account you have access to. Change your passwords, enable two-factor authentication, and scan your devices for remote access software that scammers sometimes install during the setup process. Check your email for forwarding rules you did not set up, and review your exchange accounts for linked addresses or withdrawal settings that were changed without your knowledge.

Do this before making any further transfers.

Building the Record

Crypto transactions leave a trail, but the window for capturing it closes quickly. Exchanges update their interfaces, chat platforms delete messages, and fake investment sites go offline without notice.

Preserving Transaction Evidence

Everything from this point forward depends on what you can document. Wallet addresses, transaction IDs, exchange account statements, screenshots of every conversation with the scammer (including the early ones), wire transfer receipts, credit card statements, deposit instructions, and dashboard screenshots from the fake platform (if you can still access it).

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Get it together as early as you can. Messages will disappear. Platforms will go offline. Access will be revoked without warning. The picture you can put together on day three is going to be much more complete than anything you will be able to reconstruct a month from now.

Store copies in two separate places. A secure cloud folder and a local drive is a simple setup that works. Put together a log that records dates, times, amounts, and whatever names or identifiers were displayed on each platform. Organized records make everything easier for lawyers, investigators, and financial institutions.

Coordinating With Financial Platforms

Banks, credit card companies, and crypto exchanges may be able to freeze funds, flag suspicious wallet addresses, or open internal investigations. These processes tend to work better when the request comes in early, includes specific transaction details, and is submitted in writing. Vague complaints filed weeks later are much easier for them to dismiss.

Save the name of whoever you speak to, the reference number, and a summary of what was said. Keep copies of all emails and chat logs. This creates an audit trail that becomes important if a dispute escalates.

Recognizing Follow-Up Scams

This is the part that catches people off guard. After the initial loss, a second wave often follows.

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Someone contacts you claiming to be a recovery specialist, a government agent, or a tax official who can help get your money back. But first they need a fee, or your private keys, or a small crypto payment for verification purposes.

None of it is real. Scammers know that victims at this stage are desperate, and they use that against them. Some resort to threats. Others try to isolate the victim from family or friends who might step in and encourage reporting.

Treat any unsolicited contact about recovering your funds as a potential threat until it has been independently verified. Any request for upfront payment is a warning sign, without exception.

Legal Paths Forward

Most victims expect law enforcement to handle recovery. Criminal investigations into crypto fraud tend to move slowly and rarely focus on individual cases. Civil options often provide more direct paths, but they come with deadlines that can expire faster than people expect.

Deadlines and Leverage

Legal remedies in crypto fraud cases are not open-ended. Payment dispute windows have fixed deadlines. Statutes of limitations run on a set schedule. Certain contractual claims expire within weeks, not months. The longer someone waits, the fewer options remain.

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An early legal review can identify which of these deadlines apply and which ones are coming up fast. Credit card chargebacks, for example, have to be filed within a defined window. Certain claims against exchanges operate under similar constraints.

Timing also affects leverage. A demand letter backed by organized records and documented losses will be taken more seriously than a vague complaint filed months later. When the other side can see the case is well-prepared, negotiations tend to move forward more quickly.

Civil Options

Filing a police report is a good idea. It creates an official record and supports the timeline of events. But criminal investigations into crypto fraud are often slow and focused on larger networks. Direct results for any single victim can take a long time to secure, if they come at all.

Civil claims work on a separate track.

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Bitcoin Slides to $62,037 as Iran Conflict Sparks Fresh Energy Fears

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Bitcoin Slides to ,037 as Iran Conflict Sparks Fresh Energy Fears

Bitcoin Tumbles Amid U.S.-Iran Clashes

Bitcoin tumbled to the $62,000 range Monday as a weekend exchange of gunfire between U.S. and Iranian forces threatened to spark another energy crisis. Market data showed the top cryptocurrency plunged from a 24-hour peak of $64,385 late Sunday to $62,037 by 10:15 a.m. EST Monday.

While the cryptocurrency attempted to reclaim the $63,000 resistance level, another sell-off saw it retreat to $62,200, reversing earlier gains and leaving it down nearly 3%. The decline dragged its market capitalization down from $1.28 trillion to approximately $1.25 trillion as of 12:40 p.m. EST. The slide, in turn, helped trim the crypto economy’s aggregate market capitalization to $2.24 trillion.

Meanwhile, the slide triggered the liquidation of $83 million in long leveraged positions and $12 million in shorts. Overall, liquidations across the crypto economy topped $322 million, with liquidated long bets accounting for $267 million of the total.

Following earlier strikes in the week, the U.S. military upped the ante Sunday, striking more than 100 targets across Iran. The U.S. maintains the strikes were in response to Iranian attacks on shipping vessels transiting the Strait of Hormuz. In addition to the strikes, some media reports suggested the U.S. military was contemplating a blockade on Iranian ports.

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Iran, which rejects the allegations, launched retaliatory strikes targeting U.S. bases and installations across five Gulf countries, including Qatar and Tehran’s ally Oman. Iran insists Washington is violating a memorandum of understanding (MoU).

The apparent return to full combat operations came days after U.S. President Donald Trump declared the ceasefire between the two sides over. The U.S. leader also accused Tehran of violating the terms of the MoU, which requires Iran to reopen the Strait of Hormuz.

Following the latest escalation, oil prices jumped 4.5%, with the global benchmark Brent crude breaching the $80-per-barrel mark. According to analysts, market concern is expanding beyond crude oil prices, with investors increasingly focused on disruptions to global refining capacity and fuel supply chains. Ongoing conflicts have affected refinery operations across the Middle East and, recently, key global shipping routes in the Russia-Ukraine region.

“Even if crude oil prices stabilize, gasoline and diesel prices could remain elevated due to limited refined fuel availability. This creates a risk that energy inflation may prove more persistent than markets currently anticipate,” a Bitunix analyst asserted in a recent report.

For global markets, including crypto, the central question for this week extends beyond whether U.S. inflation rises again. The bigger issue is whether global capital costs continue moving higher.

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With AI investment absorbing significant funding, energy supply chains facing uncertainty, and Federal Reserve policy remaining unsettled, risk assets are likely to remain driven by the interaction among interest rates, liquidity conditions and corporate financing costs.

“For bitcoin, reclaiming and holding above $64,000 could improve short-term momentum. However, continued pressure from higher capital costs may keep BTC trapped within a broader consolidation range,” the analyst said.

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