Crypto
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
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.
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.
(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.
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.
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.
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.
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.
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)
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)
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)
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)
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.
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)
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.
- Since each state has different regulations, it makes nationwide operations difficult.
- Money transmitter licensing rules differ across states, which may be friendly or strict, making compliance restrictive and complex.
- 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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Key Takeaways
- Safaricom, Google, and Meta joined a United for Wildlife taskforce in 2024 to crush illegal trafficking.
- AI will monitor M-Pesa to disrupt a $23B illicit market that puts 1M species at risk of extinction.
- Next, British Airways and Heathrow will launch public campaigns to tighten the net on global smugglers.
Squeezing the Financial Flows
Kenyan telecom giant Safaricom has joined forces with a coalition of international technology, payments, and cryptocurrency firms to dismantle the financial networks driving the illegal wildlife trade. The initiative was announced at a recent event convened by Prince William and The Royal Foundation’s United for Wildlife taskforce.
According to a report, the coalition brings together technology giants, including Google, Meta, Tiktok, and Alibaba. The companies have committed to completely eradicating wildlife trafficking from their platforms using artificial intelligence (AI)-driven detection and prevention systems to catch illicit listings before sales take place.
While social media and e-commerce platforms focus on front-end listings, the battle is simultaneously moving to the financial back-end. Illegal wildlife trafficking is an extensively lucrative enterprise, with the United Nations Environment Programme (UNEP) estimating it generates up to $23 billion annually. It is a driving factor behind putting an estimated one million plant and animal species at risk of extinction.
To sever these financial lifelines, Safaricom—alongside its parent companies Vodafone and Vodacom—will deploy AI within its anti-money laundering (AML) and transaction monitoring systems. The AI will be integrated across M-Pesa, Africa’s leading mobile money platform, to flag and disrupt suspicious transactions linked to poaching and trafficking syndicates.
Concurrently, mainstream payment processors and major cryptocurrency analytics firms—including Paypal, Chainalysis, TRM Labs, and Luno—have pledged to use blockchain tracking and advanced digital forensics to hunt down and expose cross-border crypto wallets and alternative payment pathways used by wildlife smugglers.
The urgent need for digital and financial intervention is underscored by the historic devastation of Africa’s iconic megafauna, most notably the white rhinoceros. The species serves as a stark warning of how rapidly unregulated, criminal markets can push an animal to the absolute brink of extinction.
While intensive, century-long conservation efforts successfully revived the Southern White Rhino population to around 17,000, a resurgence in organized poaching over the last two decades has threatened to undo those gains. Rhino horn, which is composed of keratin (the same protein found in human hair and fingernails), has been sold on the black market for up to $60,000 per kilogram—making it more valuable by weight than gold or cocaine.
This immense profit margin shifted poaching from localized hunting to highly organized, transnational crime syndicates. By cutting off the modern payment infrastructure used by these syndicates, the new coalition aims to ensure other vulnerable species do not suffer the same fate.
A Unified Front
The private sector’s massive, coordinated pivot marks a turning point in environmental corporate responsibility, moving past standard non-profit donations toward deploying core tech architecture against criminal networks.
“What we see from the private sector today is a recognition that the illegal wildlife trade is both an environmental and a business issue,” said David Fein, co-chair of United for Wildlife.
Supporting the digital crackdown on the ground and in the skies, aviation leaders British Airways and Heathrow Airport also announced they will launch expansive public awareness campaigns to help travelers identify and report suspected wildlife products, tightening the net on smugglers globally.
SOUTH LAKE TAHOE, California (KOLO) – A former South Lake Tahoe man has been found guilty in a series of scams involving cryptocurrency.
The Department of Justice says 53-year-old Daniel Chartraw also used sham business ventures and false investment guarantees causing substantial financial losses to numerous victims nationwide.
The DOJ says that, between March 2021 and February 2022, Chartraw and an associate controlled multiple companies. They say that he and several other individuals acting on his behalf represented that one of his companies was a web-based cryptocurrency trading company that guaranteed high returns with no risk.
At various points, he also claimed his other company, TDA Global, was engaged in supplying jet fuel to airlines or operated its own cryptocurrency trading platform.
“This verdict sends a clear message: individuals who exploit the trust of others and steal through deception will be held accountable,” said U.S. Attorney Grant. “The defendant lied to investors and caused serious financial and emotional harm. Our office will continue to pursue those who use emerging technologies, including cryptocurrency, as vehicles for fraud.”
Chartraw communicated with potential and existing investors through phone calls, texts, emails and virtual meetings using Teams and Zoom. The DOJ says that, although he was directing operations, he frequently used aliases and told associates he needed to conceal his identity due to a prior fraud conviction.
The DOJ says he repeatedly accessed his company’s bank account despite not being a signatory, and used it to withdraw cash, make purchases, and transfer investor funds to accounts he controlled.
Authorities say he also used fabricated account statements, false assurances of growth, and repeated misrepresentations to persuade victims to invest additional funds. When investors attempted to recover their money or questioned delays, Chartraw provided excuses, deflected responsibility or stopped communication altogether.
The total loss to investors was nearly $1 million.
Chartraw will be sentenced in September and faces a maximum of 20 years in prison and a fine of $250,000 for each count
Copyright 2026 KOLO. All rights reserved.
Key Takeaways
Developers in the Crosshairs
Lummis made her case via a statement shared on June 22, singling out the legal exposure faced by the people who write code for decentralized finance ( DeFi) tools, wallets and other onchain services. She has repeatedly argued that the absence of clear rules leaves engineers guessing whether routine work could later be treated as a crime, a fear that has lingered over the industry since a wave of enforcement actions in prior years. She added:
“Software developers should not need an army of lawyers to know if their code is legal. The Clarity Act ends that absurdity.”
The Digital Asset Market Clarity Act, known as the CLARITY Act, would split oversight of digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) and set out when a token should be treated as a security or a commodity.
It also carries language to shield developers and infrastructure providers who never take custody of customer funds from being classified as money transmitters, a designation that carries heavy licensing and surveillance obligations.
A Bill Months in the Making
The legislation has been advancing in stages, with the House passing its version in July 2025 by a 294-134 margin, and on May 14, 2026, the Senate Banking Committee advanced an amended bill in a bipartisan 15-9 vote. The measure has since been placed on the Senate calendar, making it formally eligible for floor consideration.
Not everyone is convinced, though, and Senator Elizabeth Warren has routinely opposed the bill during the committee markup, offering 44 amendments, none of which passed, and warning that the framework could blow up the economy. Lummis, by contrast, has cast the stakes in national terms, cautioning that inaction could cede digital-asset leadership to China and Europe.
The senator has also put a clock on it, warning that missing the current window could push comprehensive crypto legislation to 2030. She has said customers may lack guaranteed rights to their holdings if a digital-asset exchange goes bankrupt, leaving them stuck in creditor proceedings rather than recovering their assets directly.
Industry and National Security Support
Outside Congress, the bill has drawn an unusually broad coalition. A group of 160 national security, intelligence and law enforcement veterans signed a letter to Senate leaders backing the measure, while more than 1,200 tech companies pressed the Senate to pass it quickly. Ripple Chief Executive Brad Garlinghouse has thrown the company’s weight behind the bill, saying “this is the moment” for U.S. crypto rules.
Supporters argue that regulatory certainty would keep developers and startups onshore rather than pushing them toward jurisdictions with clearer frameworks, such as the European Union’s Markets in Crypto-Assets (MiCA) regime. Without it, they say, the U.S. risks exporting its most promising builders along with the jobs and tax revenue they generate.
The next hurdle is a full Senate vote, where the bill must clear the 60-vote filibuster threshold before any reconciliation with the House version and a signature from President Donald Trump. With the legislative calendar tightening, Lummis and her allies are betting that the prospect of renewed prosecutions and the risk of falling behind global rivals will be enough to move undecided senators. For developers watching from the sidelines, the outcome will determine whether writing code remains a legal gray area or finally gets a clear rulebook.
1,200 Tech Companies Push Senate to Pass CLARITY Act Quickly as US Crypto Rules Face Global Pressure
The Consumer Technology Association, which represents more than 1,200 technology companies, urged Senate leaders to advance the CLARITY Act as…
1,200 Tech Companies Push Senate to Pass CLARITY Act Quickly as US Crypto Rules Face Global Pressure
The Consumer Technology Association, which represents more than 1,200 technology companies, urged Senate leaders to advance the CLARITY Act as…
1,200 Tech Companies Push Senate to Pass CLARITY Act Quickly as US Crypto Rules Face Global Pressure
The Consumer Technology Association, which represents more than 1,200 technology companies, urged Senate leaders to advance the CLARITY Act as…
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