The US regulatory framework for virtual assets has been characterized by years of ambiguity, but 2025 has been a pivotal year with significant legislative and regulatory developments. The approach is a mosaic of different federal and state agencies, with a new emphasis on clear, coordinated action to foster innovation while protecting investors and national security.
Governing bodies and key history
The US regulatory landscape is defined by the mandates of several powerful agencies, whose roles have become more defined in 2025:
- Securities and Exchange Commission (SEC): The SEC regulates crypto assets it considers to be securities. It has broad authority over markets, exchanges, brokers, and dealers that deal in these assets. A joint statement issued in September 2025 with the CFTC clarified that registered exchanges are not prohibited from listing certain spot crypto products, a move that provides greater regulatory certainty.
- Commodity Futures Trading Commission (CFTC): The CFTC has exclusive jurisdiction over digital assets classified as commodities. The new Digital Asset Market Clarity Act of 2025 (CLARITY Act), which passed the House and was referred to the Senate in September 2025, grants the CFTC exclusive regulatory jurisdiction over digital commodity cash or spot markets.
- Financial Crimes Enforcement Network (FinCEN): FinCEN, a bureau of the US Department of the Treasury, enforces the Bank Secrecy Act (BSA) and is the primary regulator for anti-money laundering (AML) and counter-terrorism financing (CTF). FinCEN classifies most crypto businesses as Money Services Businesses (MSBs). A recent notice from FinCEN in August 2025 warned financial institutions to be vigilant in identifying and reporting suspicious activity involving virtual currency kiosks, citing links to fraud and drug trafficking.
- Federal Reserve (the Fed): The Fed, along with other banking regulators like the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), is clarifying its stance on crypto-asset activities for traditional banks. In 2025, a new law called the GENIUS Act also restricted the Federal Reserve from offering certain products directly to individuals, a measure aimed at preventing a central bank digital currency (CBDC) without congressional approval and promoting private sector stablecoin innovation.
The most recent text definition of key items
- Digital Asset: The CLARITY Act of 2025 divides digital assets into three primary categories for regulatory purposes: securities, commodities, and stablecoins.
- Digital Commodity: The CLARITY Act defines a digital commodity as “a digital asset that is intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system”.
- Virtual Asset Service Provider (VASP): In the US, the term VASP is used in line with FATF recommendations. FinCEN classifies most VASPs as Money Services Businesses (MSBs). This includes peer-to-peer exchanges, wallet providers, CVC kiosk operators, and trading platforms.
- Payment Stablecoin: The GENIUS Act of 2025, signed into law in July 2025, provides the first federal regulatory framework for stablecoins. A payment stablecoin is a digital asset designed to be used as a means of payment or settlement and is redeemable for a fixed amount of monetary value.
The key elements of their regulation
The US regulatory framework is moving towards greater clarity and inter-agency coordination.
- Jurisdictional Clarity: The CLARITY Act of 2025 gives the CFTC exclusive jurisdiction over digital commodities, while the SEC retains authority over securities. This a significant step towards resolving the long-standing dispute between the two agencies over which assets fall under their respective purviews. The SEC still retains some anti-fraud and market manipulation authority over digital commodities when they are transacted on SEC-registered entities.
- Stablecoin Regulation: The GENIUS Act of 2025 is a landmark federal law for stablecoins. It requires all stablecoin issuers to maintain 100% reserve backing with liquid assets like US dollars or short-term US Treasuries. Issuers are also prohibited from paying interest to stablecoin holders.
- AML/CTF and the Travel Rule: The BSA, enforced by FinCEN, is a cornerstone of AML/CTF regulation for VASPs. The Travel Rule mandates that VASPs collect and share originator and beneficiary information for transactions above a certain threshold, which is currently $3,000 in the US.
- Consumer Protection: Recent legislative efforts and guidance from regulators focus on strengthening consumer protection. The GENIUS Act, for instance, gives stablecoin holders priority claims on reserve assets in the event of an issuer’s insolvency. At the state level, new laws like the Digital Assets and Consumer Protection Act in Illinois are designed to give state regulators the authority to regulate digital asset companies and strengthen consumer protections.
Requirements for the VASP
VASPs in the US, generally classified as MSBs, must comply with a complex set of federal and state rules.
- Registration: MSBs must register with FinCEN within 180 days of beginning operations. Under the CLARITY Act, digital commodity exchanges, brokers, and dealers would have to file a statement of provisional registration with the CFTC.
- AML Program: All MSBs must establish a written, risk-based AML program with four pillars: policies and procedures, a designated compliance officer, ongoing staff training, and an independent review.
- Travel Rule Compliance: For transactions of $3,000 or more, VASPs must collect and retain specific records and ensure that the required information travels with the funds to the next financial institution. The required data includes the originator’s and beneficiary’s names and addresses, account numbers, the amount, and the execution date.
- Sanctions Compliance: VASPs must proactively screen for sanctioned addresses and entities from the Office of Foreign Assets Control (OFAC) to avoid facilitating prohibited transactions.
- Custody: The CLARITY Act requires futures commission merchants to hold customers’ digital assets with a qualified digital asset custodian, which would be subject to regulation by federal, state, or foreign authorities.
What it means for the stakeholders
- Financial Institutions: Regulatory clarification is providing banks and other financial institutions with the confidence to explore new crypto-asset products. New laws are making it easier for banks to engage in activities like crypto-asset custody and stablecoin issuance.
- Investors: The new regulatory landscape is designed to provide greater access, security, and legitimacy for investors. With the introduction of federal stablecoin regulation and clearer rules for exchanges, the crypto market is becoming a part of the financial mainstream, attracting institutional capital.
- VASPs and Fintechs: The regulatory clarity is a major boon for the industry, ending years of uncertainty and enforcement actions. However, compliance with a multitude of federal and state regulations remains a complex and resource-intensive challenge. The new rules, like the high reserve requirements for stablecoin issuers and the strict AML protocols, will likely favor larger, well-capitalized firms.
For further information, once can read the following articles:
H.R. 3633 – Digital Asset Market Clarity Act of 2025 (The White House): https://www.whitehouse.gov/wp-content/uploads/2025/07/SAP-HR3633.pdf
The GENIUS Act of 2025: Stablecoin Legislation Adopted in the US (Latham & Watkins LLP): https://www.lw.com/en/insights/the-genius-act-of-2025-stablecoin-legislation-adopted-in-the-us
FinCEN Advisory on Crypto ATM Scams (America’s Credit Unions): https://www.americascreditunions.org/blogs/compliance/fincen-advisory-crypto-atm-scams
SEC and CFTC Staff Issue Joint Statement on Certain Crypto Asset Products (Morgan Lewis): https://www.morganlewis.com/pubs/2025/09/staff-of-cftc-and-sec-issue-joint-statement-on-certain-crypto-asset-products
Crypto Regulation in the U.S.: Summer 2025 Legislative Milestones and What Comes Next (Caldwell Law): https://caldwelllaw.com/news/crypto-regulation-us-summer-2025-legislation/
