Yes, cryptocurrency is regulated in the US, but not by any single law or agency. Federal oversight is split across the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, the Internal Revenue Service, and federal banking regulators, with each agency’s authority triggered by how a particular token functions. States add a second layer through money transmitter licensing and, in a few cases, their own specialized frameworks. The result is a patchwork rather than a unified code, and the same business often has to comply with several regimes at once.
The SEC and Tokens That Act Like Securities
The SEC treats a digital asset as a security when it meets the definition of an “investment contract” under the Securities Act of 1933. The agency applies the Howey test from a 1946 Supreme Court decision, which asks whether there is an investment of money, in a common enterprise, with a reasonable expectation of profits derived from the efforts of others.1U.S. Securities and Exchange Commission. Framework for Investment Contract Analysis of Digital Assets If all three elements are present, the token has to be registered with the SEC or qualify for an exemption.
Tokens sold to fund a project where investors expect the founding team’s ongoing work to drive returns almost always meet that test. When the SEC finds a token was offered without registration, it can seek an injunction and civil penalties, and platforms listing unregistered securities can be forced to register as a national securities exchange or stop operating.2U.S. Securities and Exchange Commission. Genesis Agrees to Pay $21 Million Penalty to Settle SEC Charges
The CFTC and Tokens That Act Like Commodities
The CFTC regulates certain digital assets as commodities under the Commodity Exchange Act. Bitcoin is the clearest example: it has no central issuer and no team whose managerial effort drives its value, so it fails the Howey test. The CFTC’s authority covers fraud and manipulation in spot markets for these assets and full regulation of derivatives.
The rules bite hardest on platforms offering leveraged or margin-based trading to retail customers. A leveraged retail commodity transaction is treated like a futures contract, meaning the platform must register with the CFTC and follow the rules for designated contract markets. There is one narrow carve-out: if the customer takes full possession and control of the purchased cryptocurrency within 28 days and the seller retains no interest, the transaction is not treated as a futures contract.3Federal Register. Retail Commodity Transactions Involving Certain Digital Assets
Some tokens start as securities and later shift toward commodity treatment if the underlying network becomes decentralized enough that investors no longer rely on a central team. The line between SEC and CFTC jurisdiction depends on governance, distribution, and how much value still depends on identifiable people. Misclassify a token and you risk enforcement from either agency.
Anti-Money Laundering Rules for Exchanges
FinCEN, a bureau of the Treasury Department, treats cryptocurrency exchanges and similar businesses as money services businesses (MSBs) under the Bank Secrecy Act. Any business that exchanges cryptocurrency for regular currency or transfers digital assets on behalf of others fits the definition.4Financial Crimes Enforcement Network. Advisory on Illicit Activity Involving Convertible Virtual Currency That designation triggers a stack of compliance obligations:
- Registration with FinCEN, regardless of any state license the business also holds.5eCFR. 31 CFR 1022.380 – Registration of Money Services Businesses
- A written anti-money laundering program, with a designated compliance officer, internal controls, and employee training.
- Know Your Customer procedures, meaning identity verification with government-issued ID and residential address before a user can transact.
- Suspicious Activity Reports filed with FinCEN when a transaction of $2,000 or more looks suspicious.6Financial Crimes Enforcement Network. Suspicious Activity Reporting Requirements
The Travel Rule adds a further layer. When a customer sends $3,000 or more in cryptocurrency through an exchange, the sending institution must pass identifying information about both parties, including names, account numbers, and addresses, to the receiving institution.7Financial Crimes Enforcement Network. FinCEN Advisory – Funds Travel Regulations: Questions and Answers
A separate 2020 FinCEN proposal would require exchanges to collect and report information on transactions over $10,000 with unhosted (self-custody) wallets and to keep records on transactions above $3,000 with such wallets.8U.S. Department of the Treasury. The Financial Crimes Enforcement Network Proposes Rule Aimed at Closing Anti-Money Laundering Regulatory Gaps for Certain Convertible Virtual Currency and Digital Asset Transactions As of 2026 the proposal has not been finalized.
How the IRS Taxes Digital Assets
The IRS treats all digital assets, including cryptocurrency, stablecoins, and NFTs, as property for federal tax purposes.9Internal Revenue Service. Notice 2014-21 Every sale, trade, or other disposition can trigger capital gains tax on the difference between your cost basis and the value at disposition. Assets held one year or less are taxed at ordinary income rates; assets held longer qualify for the 0%, 15%, or 20% long-term rates, and high earners may owe an additional 3.8% net investment income tax on top.
Every Form 1040 now carries a digital asset question asking whether you received, sold, exchanged, or otherwise disposed of a digital asset during the tax year. You cannot leave it blank; you must check “Yes” or “No.”10Internal Revenue Service. 1040 (2025) Instructions A false answer can lead to audits, accuracy penalties, and in serious cases criminal exposure, and the IRS cross-checks the answer against exchange data.11Internal Revenue Service. 12Internal Revenue Service. Form 1099-DA – Digital Asset Proceeds From Broker Transactions (2026) The form brings crypto reporting closer to what already applies to stocks and bonds.
Cryptocurrency received through mining, staking rewards, or as payment for work counts as ordinary income at fair market value on the date of receipt.13Internal Revenue Service. Frequently Asked Questions on Virtual Currency Transactions Wages paid in crypto are subject to federal withholding, FICA, and FUTA, and go on a W-2. Independent contractor income in crypto is self-employment income.
One quirk: the wash sale rule that blocks stock investors from claiming a loss when they repurchase the same security within 30 days does not currently apply to cryptocurrency, because the IRS classifies digital assets as property rather than securities for this purpose. Congress has proposed closing that gap, but no such law has been enacted as of 2026.
Stablecoin Rules Under the GENIUS Act
Stablecoins, meaning digital assets designed to hold a fixed value (usually pegged to the dollar), got their own federal framework through the GENIUS Act.14U.S. Congress. S.1582 – GENIUS Act The law sets requirements for entities issuing payment stablecoins and splits oversight among federal banking regulators.
Implementing rules from the Office of the Comptroller of the Currency require permitted stablecoin issuers to back every outstanding stablecoin one-to-one by total fair value, using only conservative reserve assets such as U.S. currency, Federal Reserve balances, insured bank deposits, short-term Treasuries, overnight Treasury repos, and government money market funds. Reserves must be held separately from the issuer’s own assets. Issuers must publish monthly reserve composition reports examined by an independent public accounting firm, and their CEO and CFO must certify each report to the OCC.15OCC.gov. Implementing the GENIUS Act for the Issuance of Stablecoins by Entities Subject to the Jurisdiction of the OCC The National Credit Union Administration is developing parallel rules for credit union-affiliated issuers.16National Credit Union Administration. NCUA Proposes Rule for Permitted Payment Stablecoin Issuer Applications
State Licensing on Top of Federal Rules
Most states require cryptocurrency businesses that hold or transfer funds for residents to obtain a money transmitter license. Because each state sets its own rules, a nationwide exchange typically has to secure dozens of separate licenses, plus surety bonds, background checks, and ongoing compliance costs. Two states stand out for going further.
New York’s BitLicense
New York’s BitLicense, codified at 23 NYCRR Part 200, is one of the most demanding state regimes. Companies conducting virtual currency business activity involving New York residents must apply for and maintain a license carrying requirements for capital reserves, cybersecurity programs, anti-money laundering compliance, and customer asset protections. Operating without authorization can bring cease-and-desist orders and fines.17Legal Information Institute. New York Regulations Title 23, Chapter I, Part 200 – Virtual Currencies
Wyoming’s Special Purpose Depository Institutions
Wyoming created a Special Purpose Depository Institution (SPDI) charter that lets companies provide banking-like services tailored to digital assets. SPDIs must hold reserves equal to at least 100% of customer deposits of traditional currency at all times and are barred from lending those deposits out.18Division of Banking. Special Purpose Depository Institutions19Wyoming Legislature. 2019 HB0074 – Special Purpose Depository Institutions
Consumer Protection and Custody
The Consumer Financial Protection Bureau has authority to act against unfair, deceptive, or abusive practices by financial service providers, and consumers can file complaints about frozen accounts, unauthorized transfers, or misleading fee disclosures through its public complaint database.20Consumer Financial Protection Bureau. Policy Statement on Abusive Acts or Practices Its enforcement activity has been significantly curtailed since early 2025, so the practical reach of that oversight is uncertain right now.
On custody, the SEC rescinded Staff Accounting Bulletin No. 121, which had required companies safeguarding crypto for customers to carry a corresponding liability on their balance sheet, and replaced it with SAB 122. Under the new guidance, companies apply standard loss-contingency accounting rather than the earlier balance-sheet approach, while still disclosing the nature and amount of digital assets they hold for customers, who controls the cryptographic keys, and whether those assets would be reachable by general creditors in bankruptcy.21U.S. Securities and Exchange Commission. Staff Accounting Bulletin No. 122
Federal Holdings and Pending Legislation
In March 2025, President Trump signed Executive Order 14233 establishing a Strategic Bitcoin Reserve and a separate United States Digital Asset Stockpile, funded from Bitcoin and other digital assets the federal government has obtained through criminal and civil forfeiture. Under the order, Bitcoin in the reserve is not to be sold and is held as a long-term strategic asset; other forfeited digital assets go into the Stockpile, managed by Treasury.22Federal Register. Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile
Broader market structure legislation, which would more clearly divide authority between the SEC and CFTC, has been under active consideration in Congress. The Senate Banking Committee advanced markup on comprehensive digital asset legislation in early 2026, but no market structure bill had been signed into law as of mid-2026. Until Congress acts, the answer to whether crypto is regulated remains the same: yes, by many agencies at once, with the applicable rules turning on what the token is and what the business does with it.