When it comes to regulating the cryptocurrency space in the United States, we are witnessing a new regulatory environment or attitude in 2025 under the second Trump administration. Per Grant Thornton: “the attitude in the U.S. regulatory environment has ‘fundamentally shifted toward supporting digital assets’.” Hence, there is new momentum for legislation around cryptocurrency and stablecoins. President Trump signed an executive order which declared that crypto is now a national priority and endorses “the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.”
This change in atmosphere has led to a lot of significant changes: the SEC has deferred certain cases of note against big companies while establishing a Crypto Task Force focused on innovation and investor protections, an interagency working group has convened to come up with regulatory and legislative recommendations, and progress is being made on stablecoin legislation. Additionally, the government has established a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile.
These results really reflect a turnaround from the previous tone that signaled a more favorable environment for crypto innovation and adoption that focused on consumer protection and the right level of Crypto Regulatory oversight.
1. Government's Viewpoint & Explanation of Concept
The United States government has shown keen interest in and had substantive involvement in cryptocurrencies through a number of federal agencies, including the SEC, CFTC, FTC and the Treasury Department. Although these agencies have participated in cryptocurrency related activity over the years, they may have limited formal rulemaking activity. Congress has put forth a number of bills that attempt to clarify cryptocurrency regulation, including GENIUS Act, the STABLE Act, and the Financial Innovation and Technology for the 21st Century Act (FIT21)
At the state level, approaches to cryptocurrency regulation vary tremendously. Some states, such as Wyoming and Utah, have enacted conducive legislation to enhance innovation and attract investment; Wyoming, for instance, passed legislation creating special purpose depository institutions for crypto businesses and recognized decentralized autonomous organizations (DAOs) as a LLC form. In the opposite vein, some states have removed barriers that required a money transmitter license and adhered to state securities laws. The Biden Administration also signed an Executive Order in 2022, that attempted to outline and focus on the priorities of addressing risks and regulation in the cryptocurrency industry while supporting responsible innovation.
As such, a well-developed, comprehensive unifying framework to regulate digital assets was developed and guided by the input from the aforementioned regulatory agencies. However, the 2023 Economic Report of the President took a more assertive and critical brushing stance to crypto, stating that crypto assets currently, " do not have widespread economic benefit and are essentially speculation investments".
Each jurisdiction does not use a standard definition of cryptocurrency, and uses terms such as "virtual currency", "digital assets", and "crypto assets" in interchangeable ways. Some states have made many amendments to the Uniform Commercial Code to include digital assets in their definitions of controllable electronic records. Overall, broader, technology agnostic definitions are seen as more appropriately adaptable and responsive to the evolving nature of cryptocurrency in understanding the concept.
Crypto Compliance in the U.S. Has Taken a Turn with a Lighter Touch
The SEC has put a pause on high-visibility enforcement actions against digital asset companies; this is the first sign that the lighter approach will soon be a practice. Now, President Trump has also put Paul Atkins, a former commissioner and a financial regulatory consultant that previously provided advice to a digital assets industry trade group, in charge of the SEC, and Brian Quintenz, who had headed crypto policy for a venture capital firm, has become the chair of the CFTC; still, the Senate must confirm them.
The SEC has also thrown together a Crypto Task Force with a stated goal to "foster innovation and to protect investors." The task force has not provided a timeframe for policy recommendations but has made it clear the direction is forward, with priorities including:
Restructuring the route to registration utilizing Rule A and crowdfunding routes.
Assessing temporary and retroactive relief for coin and tokens offerings.
Revisiting the regulatory environment regarding the regulatory apparatus as to the fit of digital assets with the regulatory structure.
On another note, the SEC Division of Corporation Finance posted a Staff Statement on Meme Coins whereby the SEC believed "The offer and sale of meme coins does not involve an investment in an enterprise, or any expectation of profit." Meaning, in effect, that meme coins do not pass the Howey test when determining whether the transaction meets the investor-type transaction as set forth in U.S. securities laws.
Read also: Crypto Regulations: 4 Compelling Reasons for Regulating Digital Assets
The White House's Crypto Strategy
President Trump has clearly shown a great deal of support for the crypto industry. More specifically, President Trump entered his second term as the only president in history to issue entirely unique non-fungible tokens (NFTs) enabled by blockchain technology, and both he and the First Lady just before returning to the White House announced branded digital coins. Adding in millions of dollars in donations to the campaign from people in the crypto industry aligns more strongly that the President is pro crypto.
The executive order endorsing the use of digital assets called for the formation of an interdepartmental working group with a six month deadline to produce recommendations for both regulatory and legislative proposals for the future of digital assets. The working group is chaired by David Sacks who has a background not only as a venture capitalist but also serves as the President’s Special Advisor for AI and Crypto. The executive order also tasks the interdepartmental working group with investigating the value of establishing a national stockpile of digital assets.
On March 6, 2025, President Trump signed another executive order creating a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile “to serve as a secure account for orderly and strategic management of the United states’ other digital asset holdings.” Both the Strategic Reserve and the Stockpile will consist of previously confiscated bitcoin and digital assets, and the Secretary of Commerce and the Secretary of the Treasury will be directed to develop strategies for management of those assets.
Legislative Momentum and Framework
It looks like stablecoin legislation is getting ready to move first and there’s broad bipartisan interest in establishing a regulatory framework. The STABLE Act, led by House Financial Services Committee Chair French Hill, and the GENIUS Act in the Senate would create a regulatory framework for stablecoins.
On March 13, 2025, the Senate Banking Committee voted 18 to 6 to approve the GENIUS Act. The legislation defines a payment stablecoin as a digital token pegged to a fixed monetary value and clearly identifies it as distinct from algorithmically controlled stablecoins that were severely damaged in 2022. Some provisions of the legislation include requiring that reserves backing stablecoins be separate from other corporate assets, designating who may issue a stablecoin (including nonbank organizations and federally and state-chartered banks), and requiring monthly proof of reserves verification.
The goal of the series of legislation is to create standardized oversight and compliance costs that don’t discourage new competition, since stablecoins are currently regulated as payment processors on the state level, which creates barriers to entry. However, there will need to be a bipartisan consensus to advance the legislation, since the Senate requires 60 votes to proceed on the bill and Republicans only have 52 seats.
2. Defining Digital Assets: Securities (SEC) vs. Commodities (CFTC)
There is currently a continuous debate about the suitable regulations of cryptocurrency transactions. The main question is whether cryptocurrencies should be categorized as securities (which are then regulated by the SEC) or as commodities (which are regulated by the CFTC). This follows through to determine who actually controls the trading and exchanges of a cryptocurrency digital asset.
Bitcoin, the most famous digital asset, is classified as a commodity. It leads to the CFTC handling regulation, especially concerning futures & derivatives markets rather than the markets that exchange the coins directly. Eventually lawmaking will set a clear set of standards.
They've suggested numerous legislations to aid public decision-making on the varying agencies regulating the various types of cryptocurrencies. For example:
The Responsible Financial Innovation Act: RFIA is intended to give the CFTC jurisdiction over crypto tokens that do not convey any rights to investors in any venture.
The McHenry-Thompson Bill states that CFTC's primary competence will cover the digital asset markets; however, the SEC will play a role depending on the design or how the assets work.
Recently, legal disputes have affected regulations in crypto. In 2023, one judge ruled that selling XRP to everyday investors was not offering securities under the law, but selling XRP to institutional investors was offering securities under the law. Some might be confused about these developments, particularly because a different judge disagreed with that rationale in another case.
3. Sales Regulation
The sale of cryptocurrency or token sale in the United States is organized by two main considerations: whether the sale is considered a security under either state law or federal law, or whether state law regulates it as money transmission or activities that make the person a money services business (MSB) under federal law.
The SEC looks out for cryptocurrency, especially Initial Coin Offerings (ICOs), because most of it is regulated based on federal securities laws. At the SEC, we had been tracking a lot of enforcement actions against ICOs, including the unprecedented federal action started against Ripple Labs Inc., in 2020 in connection to Ripple's sale of its XRP token Ripple sold without registering as a security.
The CFTC has taken a position, primarily stating cryptocurrency assets, such as Bitcoin and Ethereum, are to be viewed as commodities. So, any depiction of cryptocurrencies is treated as a commodity as set out under the Commodity Exchange Act (CEA), and therefore in the CFTC's jurisdiction. The CFTC also made provisions for trading futures, options, swaps, and all other derivative contracts which reference the price of a crypto asset. The CFTC regulates at least attempts to manipulate the market regulating commodities.
More recently, the legal landscape has brought some uncertainties for regulators. In 2023 new case law developed when a judge in the Southern District of New York ruled that XRP was deemed a security only in terms of its institutional sales. In another part of the country, a judge reached the opposite conclusion, saying Terraform's UST stablecoin was a security. These new decisions highlight the difficulties in categorizing Utah and some of the newer cases of cryptocurrencies again based on differences in financial situations.
4. Securities Laws
The U.S. Securities and Exchange Commission (the "SEC") regulates the sale and resale of digital assets that are considered securities. A security generally means when someone puts money into an investment with an expectation of profit from the efforts of someone else. A digital asset can be treated as a security even if it has utility when it meets certain characteristics.
Recently, the SEC has taken enforcement action against companies such as Telegram and Kik because they sold unregistered securities through their tokens. The SEC told Telegram that it had to refund investors and pay a penalty because it sold GRAMS tokens which were deemed to be securities. Kik was also penalized for selling Kin tokens. Based on the Telegram and Kik actions, it seems that the SEC is serious about enforcement when it comes to the issuance and sale of a digital asset that is a security.
The SEC also stated that Ripple Labs, Inc. sold XRP as an unregistered security. A court determined that selling XRP to general investors did not relate to security, while selling to strategic investors did. These cases show the difficulty of applying securities statutes to digital assets.
The way the SEC will regulate will have a significant impact on how digital assets trade. Securities are required to be trading on an approved exchange or an approved platform. The SEC has signaled it might make the market change to require more crypto businesses to register as a dealer, which could be a huge change for this market.
5. Anti-Money Laundering (AML) Agreement: What You Should Know
A PrimerThe Bank Secrecy Act (BSA) requires anti-money laundering responsibilities on certain businesses, such as banks, credit unions, and money services businesses (MSBs). FinCEN manages these rules in the business of money services, which includes crypto exchanges, digital currency management, etc.
If it turns out that your business is categorized as a money transmitter, you need to:
Evaluate your risk of being a money laundering vehicle
Create an anti-money laundering (AML) program that includes:
Written policies and procedures
A designated compliance officer
Employee training
Periodic independent testing
Moreover, you should be aware that businesses in the U.S. cannot conduct business with sanctioned parties that appear on The Office of Foreign Assets Control (OFAC) list (the SDN List). To avoid the risk of extra fines, you should have provisions in place to ensure that you’re not conducting business with anyone on the sanctions list.
6. Taxation
Cryptocurrency tax is simply taxing laws related to transactions of digital currencies, such as bitcoin or ether. As countries around the world try to regulate and tax these wealth-creating assets, crypto tax is moving very quickly. For example, under sales tax rules digital tokens are treated as "commodities" or "assets" but not "currency," determining how the cryptocurrency will be taxed depending on the sales tax treatment of the transaction.
In a significant number of jurisdictions the sale of cryptocurrency just requires a capital gains tax instead of a sale tax - basically, any "wage" derived from the sale of cryptocurrency would be treated as a capital gain similar to the treatment of stocks and/or real estate. This rules will vary markedly in each and every country, and may sometimes impose value added tax (or VAT) or goods and services tax (GST) in some instances
Regulating cryptocurrency taxation poses several challenges, including the decentralized nature of these assets and the lack of clear international standards. Governments must balance the need to generate revenue with the risk of stifling innovation in the crypto sector. As a result, regulatory frameworks are often evolving and can be complex, requiring individuals and businesses to stay informed about changing tax laws.
As the cryptocurrency market continues to grow, we can expect further developments in taxation policies. Governments may introduce clearer guidelines on how cryptocurrencies are taxed in sales transactions, potentially aligning them more closely with traditional financial assets. This could lead to increased clarity and stability for investors and businesses operating in the crypto space.
7. Promotion and Testing
Arizona was the first state in the country to create a "regulatory sandbox" to help develop new emerging industries in fintech, blockchain, and cryptocurrencies. The bill provides regulatory relief to innovators in these industries who want to bring new products to market in the state. Under the program, companies can test their products for up to two years and serve up to 10,000 customers before needing to apply for a formal license. Since Arizona, other states have created similar programs - including Wyoming, Florida, Utah, West Virginia, Kentucky, Vermont, Nevada, and Hawaii.
8. Ownership and Licensing Requirements
Those fund managers who trade in cryptocurrency futures contracts will have to register as a commodity trading advisor (CTA) and a commodity pool operator (CPO) with the CFTC and the National Futures Association (NFA), unless one of the limited exemptions applies. Also, leverage or margin could also trigger registration if the fund manager or the fund is otherwise subject to certain modifications of the Dodd-Frank Act.
The CFTC has jurisdiction over leveraged transactions, which was nicely illustrated in their action against Bitfinex. Lastly, DAOs can also be held liable under the Commodity Exchange Act ("CEA"), as reiterated in the Ooki DAO case, where it was found that DAOs could be "persons."
9. Mining and Crypto Regulation
The United States is now a significant factor in cryptocurrency mining and has control of over a third of all Bitcoin mining processing power in the world. Consequently, lawmakers have begun to pay attention and are a bit worried and examined cryptocurrencies' environmental and economic implications. For example in January 2022, the U.S. House of Representatives held a hearing called "Cleaning up Cryptocurrency: The Energy Impacts of Blockchains” specifically focused on the energy impacts of cryptocurrency mining.
Some level of regulation of cryptocurrencies has been explored by various states in various manners through all parts of the country. Most recently, New York passed a bill that will impose a two-year moratorium on proof-of-work (PoW) mining once the bill is signed into law. The bill aims for an overall environmental impact study and to cease PoW mining from receiving electricity from carbon-based means.
On the flip side of the debate, some states are devising and passing legislation to support mining, including Oklahoma, who passed the Commercial Digital Asset Mining Act of 2022. The bill will provide a state sales tax exemption on specific crypto miners and machinery associated with crypto mining to support the industry in hopes of growth.
Kentucky has even passed a state-level sales tax exemption for miners and mining facilities and follows Oklahoma to closely implement provisions to provide miners with benefits even when purchasing energy at the commercial level. These and various state-level regulations illustrate the on-going debate and developments to regulate effects of cryptocurrency mining as the understanding of cryptocurrency mining continues to be understood by each individual state in the U.S.
10. Border Restrictions and Declarations
U.S. lawmakers have proposed a requirement that individuals declare their cryptocurrency holdings upon entering the U.S., but thus far, no such requirement has gone into effect.
11. Obligation to Report
In a notice dated December 31, 2020, FinCEN announced its intent to modify regulations that implement the BSA - specifically, it will be adding the report of foreign bank and financial accounts and classifying virtual currencies as a type of reportable account.
12. Estate Planning and Testamentary Succession in Cryptocurrency
Cryptocurrency, especially Bitcoin, is starting to gain traction as estate assets because of their overall value and reliability. However, typical estate planning protocols, such as wills and revocable living trusts, are not going to work well for transferring those assets. As a result, the estate planning process will require different estate planning techniques and clauses written specifically for cryptocurrency.
Because there are no common legal practices or structures in place for cryptocurrency, estate planning will have to be done proactively. Overall, anybody that wants to leave cryptocurrency to their heirs as part of estate planning should include written instructions that are quite detailed in their estate planning documents.
Specifically, those details will depend on what type of cryptocurrency wallet the asset is held in, such as software, web, hardware or paper wallets. There are different types of cryptocurrency wallets and they require different information in estate plans. For example: if you have a single device software wallet, you'll want to document the wallet software name, its operating system, the types of virtual currency you hold, and the private or public keys or recovery phrase.
To transfer the private key information securely, it should be documented securely for transfer to the heir until they actually exercise ownership of the cryptocurrency asset. For example, the private key information can be stored in one or multiple safes, or it could be put in a safe-deposit box that only the personal representative of the estate can access after the owner's death. Etc. The point is to have some documented way to ensure that one's cryptocurrency assets are securely transferred and that the transfer occurs in compliance with the owner's intent.
13. Cryptocurrencies Now Classified in IMF's Balance of Payments
The International Monetary Fund (IMF) has updated its global standards for balance of payments to take into account the growing presence of cryptocurrencies. As part of this, cryptocurrencies (like Bitcoin) are treated as non-produced non-financial assets and tokens are treated as "equity-like" holdings, with the intent of aiding visibility into the economic impacts of digital asset markets. Simply put, the IMF provides global standards for compiling cross-border flows and use of crypto assets under the new definition.
Crypto without Liabilities
The updated Balance of Payments Manual, Seventh Edition (BPM7) from the IMF, considers cryptocurrencies without liabilities (like Bitcoin) as non-produced non-financial assets. These can be accounted in the capital account as acquisitions or disposals of non-produced assets. This classification separates them from stablecoins, which are based on liabilities and categorized as financial instruments. This distinction is made to help the IMF provide more clear guidance for countries so that they know how to track and report cross-border crypto transactions.
Staking Rewards and Validation Services
The IMF also recognizes challenges around staking and yield-earning crypto activities in its latest manual. The rewards received for holding various tokens for staking purposes are similar in nature to a dividend obtained from holding equity and must be recorded in income of the current account based on the volume of the holding and the reason for holding the asset. Lastly, the transactions related to the validating of crypto assets movement, which could involve mining or staking crypto assets, are treated similarly to the production of services and are included in computer services exports and imports, which demonstrates a reasonable step towards consistency between digital assets and the nucleus of the economy. The intent of this section is to develop a more coherent view for macroeconomic analysis and cross-country comparison of some statistics involving digital assets.
Conclusions
So to wrap it all up, it looks like the regulatory environment around cryptocurrency in 2025 is going to look much more favorable under the Trump administration; however, companies will still face a stony road navigating a web of federal and state regulations, especially around securities laws, anti-money laundering measures, and compliance with sanctions. While there's an assurance of the prospect of legislation providing clarity around regulatory frameworks, there's still hope around compliance being clearer, and less burdensome in the future.
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FAQ
1. How does the SEC and CFTC control cryptocurrencies diversely?
The SEC observes anything that has characteristics of a stock or a bond. To help decide if a cryptocurrency is safe, they use the Howey Test. The SEC's main focus is to protect investors and penalize companies that disobey the rules.
But, the CFTC is more like the commodities futures side and deals with cryptocurrencies more like commodities, the bitcoin. They're overseeing the markets of crypto futures and options contracts. They also monitor various trading platforms in order to monitor for fraud and cheating.
Primarily, the SEC is reliable for ensuring that crypto companies obey with securities laws, while the CFTC is responsible for regulating the equity and integrity of the trading markets.
2. Why is the ripple case crucial for future cryptocurrency regulations?
The 2023 Ripple court decision had two main parts:
XRP sold to regular people on crypto exchanges was not considered a security.
XRP sold to big investors (institutions) was ruled to be a security, breaking the law.
This split decision caused confusion about how to apply securities laws to cryptocurrencies. It made people question who should regulate crypto and how to enforce the rules. The ruling has been important in shaping ongoing talks about Crypto Regulatory.
3. What is the impact of a cryptocurrency being classified as a security or a commodity and how is the market access impacted?
Basically, securities that are regulated by the SEC have intense registration and disclosure requirements that limit access to the market for non-compliant projects, while commodities that are regulated by the CFTC have relatively light oversight and pedestals that foster derivatives markets for its commodities. Misclassifying assets between security and commodities can risk legal penalties and can also impact exchanges' ability to list the asset and an investor's ability to participate in the market.
4. What role does the Howey Test play in determining whether a digital asset is a security?
So the Howey Test decides, or determines, whether a digital asset, or token, is a security based on whether or not the investor has contributed/put money into a common enterprise and has the right to expect a profit, not based on their own efforts, but on someone else's efforts. If the token meets all four criteria of the test, it is subject to SEC oversight and SEC registration, as well as the need to comply with securities laws.
5. How do utility tokens differ from security tokens and how are they treated differently by regulators?
Utility tokens give you access to certain services (e.g BAT in Brave Browser) and are not subject to securities regulation. Security tokens are those which grant owners an ownership interest or stake in the target company, which follow SEC regulations, and also obligation disclosures. Regulators will carefully look at a token's purpose and marketing language. Security tokens will have to comply more with a regulatory framework than utility tokens, which trade with fewer restrictions.
