David Schepp is a veteran financial journalist with more than two decades of experience in financial news editing and reporting for print, digital, and multimedia publications.
Doug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago.
Before joining Britannica, Doug spent nearly six years managing content marketing projects for a dozen clients, including The Ticker Tape, TD Ameritrade’s market news and financial education site for retail investors. He has been a CAIA charter holder since 2006, and also held a Series 3 license during his years as a derivatives specialist.
Doug previously served as Regional Director for the Chicago region of PRMIA, the Professional Risk Managers’ International Association, and he also served as editor of Intelligent Risk, PRMIA’s quarterly member newsletter. He holds a BS from the University of Illinois at Urbana-Champaign and an MBA from Illinois Institute of Technology, Stuart School of Business.
The GENIUS Act, signed into law in 2025, established the first federal regulatory framework for stablecoins in the United States. It limits who can issue stablecoins and requires issuers to maintain reserves backing the tokens they have issued, make monthly disclosures detailing the assets held in reserve, and comply with antiâmoney laundering and consumer protection requirements.
What is the CLARITY Act?
The CLARITY Act is proposed legislation that would establish a broader regulatory framework for U.S. digital asset markets and clarify the respective roles of the SEC and CFTC. The bill passed the House in 2025 and advanced through the Senate Banking Committee in 2026, but failed to advance in the Senate in September after falling short of the votes needed to overcome a procedural hurdle.
Who regulates cryptocurrency in the U.S.?
Cryptocurrency oversight in the United States is divided among several federal agencies. The SEC regulates digital securities and crypto transactions that fall under federal securities laws, while the CFTC regulates cryptocurrency derivatives and has enforcement authority over fraud and manipulation involving digital commodities. The IRS treats cryptocurrency as property for federal tax purposes.
Open full sized image
The rules governing cryptocurrency are taking shape.
Cryptocurrency regulation is no longer a theoretical debateâitâs an evolving framework that is beginning to take shape worldwide. In the United States, Congress has moved toward establishing federal oversight of stablecoins and digital asset markets. The GENIUS Act, signed into law in 2025, established a federal regulatory framework for stablecoins, while broader market structure legislation known as the CLARITY Act advanced in Congress in 2026 but has yet to become law.
Details vary by country, but most regulatory efforts aim to balance innovation with investor protection, financial transparency, and systemic stability. Whether treating digital currencies as property, commodities, or securities, governments are now asserting clearer authority over how cryptocurrencies are issued, traded, and taxed.
Understanding the goals and structure of these regulations can shed light on how crypto technologies are being integrated into financial systemsâand where challenges remain.
Key Points
U.S. cryptocurrency regulation is evolving: Federal law now governs stablecoins, while broader legislation defining oversight of digital asset markets remains unresolved.
Governments globally have adopted widely varying approaches to digital asset regulation, from permissive frameworks to outright bans.
U.S. oversight is divided among regulators, including the SEC and CFTC, with the IRS treating cryptocurrency as property for federal tax purposes.
How cryptocurrency is regulated
Cryptocurrency regulation refers to the rules that governments use to define how digital assets can be issued, traded, stored, and integrated into financial systems. These rules vary significantly by country and continue to evolve as lawmakers respond to technological advances and market risks.
Some governments have created comprehensive frameworks that cover numerous crypto-related activities, while others have imposed partial rules or outright bans. Regulation can apply to many aspects of digital assets, including payment systems, securities offerings, taxation, and antiâmoney laundering compliance.
Reduce systemic risk by subjecting crypto firms to oversight
Learn more about blockchain technology.
EncyclopĂŠdia Britannica, Inc.
How cryptocurrency is regulated in the U.S.
Cryptocurrency regulation in the United States has historically been fragmented, with federal agencies applying different interpretations based on the nature and use of each asset. That splintered approach began to change in 2025, when Congress established a federal framework for stablecoins. Broader regulation of digital asset markets remains unsettled, although Congress and federal regulators have taken steps toward clarifying which assets and activities fall under securities or commodities laws.
In July 2025, Congress passed the GENIUS Act, a major step toward comprehensive crypto regulation. Two other high-profile billsâthe CLARITY Act and the Anti-CBDC Surveillance State Actâpassed the House in 2025 but have not become law.
GENIUS Act: Regulates the issuance of payment stablecoins, requiring full reserve backing, monthly audits, and antiâmoney laundering compliance. Only approved issuers may create stablecoins pegged to the U.S. dollar.
CLARITY Act: Would establish a broader regulatory framework for digital asset markets and clarify the respective roles of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). After passing the House in 2025, the bill advanced through the Senate Banking Committee in May 2026. In September, however, it failed to advance in the Senate after falling short of the 60 votes needed to overcome a procedural hurdle.
Anti-CBDC Surveillance State Act: Seeks to block the Federal Reserve from creating a central bank digital currency (CBDC) for public use without congressional approval. Passed the House in 2025, and similar provisions have remained under consideration in the Senate.
Federal oversight of cryptocurrency remains divided among several agencies. The SEC and CFTC issued coordinated guidance in March 2026 intended to clarify how existing securities and commodities laws apply to different types of crypto assets and transactions.
The CFTC has primary jurisdiction over digital commoditiesâblockchain-based assets that are decentralized and not classified as securities. The CLARITY Act would expand this role, giving the CFTC authority to regulate these assets much like other commodity markets.
The SEC retains authority over digital assets that qualify as securities, including those offered through initial coin offerings (ICOs) or by centralized entitiesâorganizations that control how an asset is developed or promoted.
Although states continue to play a major role in licensing and consumer protection, especially through money transmitter laws, the GENIUS Act and ongoing efforts to establish broader market rules reflect a move toward greater federal coordination in digital asset oversight.
How the U.S. regulates stablecoins
The GENIUS Act is the first federal law in the United States to establish clear rules for stablecoin issuance. The law defines payment stablecoins as digital assets pegged to the dollar and intended for use in payments. Only issuers approved by U.S. regulatorsâor foreign entities registered in the U.S.âmay create such tokens.
Issuers must maintain full reserve backing, meaning they must hold an equivalent amount of cash or highly liquid assets for every stablecoin in circulation. The provision is designed to ensure that each token can be reliably redeemed for its face value. The law also mandates monthly disclosures detailing the assets held in reserve, antiâmoney laundering compliance, consumer protection standards, and disclosure rules intended to promote market trust.
U.S. policy on CBDCs
The Anti-CBDC Surveillance State Act passed the House in July 2025but has not become law. Similar proposals have been introduced in the Senate. he legislation would restrict the Federal Reserve from issuing a retail CBDC for consumer use and from using a CBDC to implement monetary policy. The law reflects concerns about government overreach, surveillance, and the potential for a state-controlled retail banking system.
The Federal Reserve has said it has made no decision to issue a CBDC and would proceed only with authorizing legislation from Congress. The U.S. approach differs from that of countries like China, which have begun public CBDC pilot programs.
How other countries approach crypto regulation
Regulatory approaches to cryptocurrency vary widely by country. While some governments aim to encourage blockchain innovation through comprehensive legal frameworks, others focus primarily on consumer protection, taxation, or financial stability. The following examples illustrate the range of global strategies:
Canada. Canada requires cryptocurrency trading platforms to register with provincial regulators and comply with antiâmoney laundering rules. Crypto investment firms are classified as money service businesses, and digital assets are taxed like commodities. The country also permits cryptocurrency exchange-traded funds (ETFs) to be listed on the Toronto Stock Exchange.
United Kingdom. The U.K. began regulating cryptocurrency in 2020. In October 2023, the Financial Conduct Authority (FCA) introduced stricter rules on crypto advertising. The Financial Services and Markets Act 2023 also expanded oversight of stablecoins. A broader regulatory framework was approved in 2026 and is scheduled to take effect in October 2027, bringing activities including crypto trading, custody, staking, and stablecoin issuance under FCA oversight.
Switzerland. In 2020, Switzerland enacted a law on distributed ledger technologies (DLTs) that introduced DLT securities and allowed for the tokenization of financial instruments, rights, and claims. The countryâs regulatory approach is considered permissive but structured. Crypto holdings may be subject to income and wealth taxes.
El Salvador. In 2021, El Salvador became the first country to declare Bitcoin legal tender alongside the U.S. dollar. In 2025, however, the government amended its Bitcoin law, making acceptance voluntary for private businesses, requiring taxes to be paid in U.S. dollars, and limiting the public sectorâs involvement with Bitcoin.
Singapore. The Southeast Asian nation licenses cryptocurrency exchanges and custodial wallet providers under its Payment Services Act, enacted in 2019. The Monetary Authority of Singapore (MAS) also provides detailed guidance on risk management, advertising, and stablecoin regulation. The country aims to support innovation while imposing strict safeguards on retail crypto services.
European Union. The EU adopted its first unified crypto regulation, the Markets in Crypto-Assets (MiCA) regulation, in 2023, although most provisions didnât take effect until 2024. MiCA sets common rules for issuers of stablecoins, crypto asset service providers, and trading platforms across all member states. The framework emphasizes investor protection, financial stability, and cross-border regulatory consistency.
China. China began restricting cryptocurrency in 2017 by banning exchanges and initial coin offerings (ICOs), followed by a sweeping 2021 crackdown that outlawed crypto mining and most crypto transactions. At the same time, the government developed its own CBDC, the digital yuan, which entered pilot testing in late 2019 and has since expanded to more cities and applications.
Risks of regulating digital assets
Many participants in the cryptocurrency industry are strong advocates for increased oversightâbut that doesnât mean regulating crypto comes without drawbacks. Key risks include:
Regulation can restrict market access. Enhanced crypto regulation can lead to some investors having limited access to cryptocurrencies or other digital assets.
Crypto rules can stifle innovation. Stringent rules and compliance requirements can slow or obstruct the pace of blockchain innovation.
Regulation can create jurisdictional enforcement challenges. If every lawmaking body and government agency sets its own crypto policies, enforcing all those regulations may become extremely complex.
Crypto regulations can increase the cost of doing business. Adhering to crypto rules may mean spending money on additional infrastructure or time-consuming compliance processes.
Crypto laws create an obligation to stay informed about rule changes. Participants in the crypto sector need to understand the current rules, plus stay alert for policy changes.
More rules can mean a greater impact on cryptoâs financial performance. Extensive regulations governing the cryptocurrency industry could increase the cost of holding digital assets, and thus diminish their price performance.
The bottom line
Cryptocurrency regulation can bolster investor protections, deter illegal activity, and encourage broader adoption of digital assets. But unclear rules and policies that emphasize enforcement without detailed guidance have made compliance challenging. As lawmakers and agencies refine their approaches, the regulatory picture is expected to evolve and shape how cryptocurrencies fit into the broader financial system.
This article was most recently revised and updated by David ScheppThis article was most recently revised and updated by Doug Ashburn
