United States: From Enforcement-First to Legislative Leader in Digital Asset Policy

For most of the 2010s and early 2020s, the United States regulated cryptocurrency through enforcement actions. No comprehensive federal legislation governed digital assets. No clear regulatory framework distinguished the SEC’s jurisdiction from the CFTC’s. Instead, the primary regulatory instrument was the lawsuit — the SEC’s enforcement actions against token issuers, the CFTC’s actions against derivatives platforms, FinCEN’s AML prosecutions of exchanges.

This approach had defenders. Regulation by enforcement, in this view, allowed market behaviour to develop before rules were locked in — avoiding premature regulatory closure on a technology whose ultimate form was uncertain. It discouraged fraud. It applied existing investor protection concepts to new instruments without requiring Congress to act.

It also had profound costs. The regulatory uncertainty deterred institutional investment, drove talent and capital offshore, created compliance ambiguity that legitimate businesses could not resolve, and generated years of legal battles that produced inconsistent judicial outcomes. By 2024, a bipartisan consensus had emerged — not that crypto was good, but that regulatory clarity was necessary regardless of views on crypto itself.

The Regulatory Architecture

The United States has no single financial regulator. It has a fragmented architecture that reflects the country’s federal system and the historical development of its financial regulatory institutions.

The Securities and Exchange Commission regulates securities — instruments that, under the 1933 and 1934 acts and subsequent Supreme Court precedent, derive their value from the efforts of others in a common enterprise. The SEC’s position, articulated aggressively by Chair Gary Gensler from 2021 to 2024, was that most crypto tokens are securities and therefore subject to SEC registration requirements that the industry overwhelmingly had not met.

The Commodity Futures Trading Commission regulates commodity derivatives. Bitcoin has been acknowledged as a commodity in multiple legal proceedings; Ether was also treated as commodity-like in CFTC enforcement contexts. The CFTC’s approach to crypto spot markets was limited by its statutory authority — the CFTC can regulate commodity derivatives but has limited direct authority over spot markets.

The Treasury Department, through FinCEN, applies Bank Secrecy Act requirements — AML/CFT obligations — to money services businesses, including most crypto exchanges. The Office of the Comptroller of the Currency has authority over national banks, including their crypto custody activities. The Federal Reserve has payment system oversight and bank holding company authority.

The result is a regulatory landscape in which a single crypto business might face oversight from three or four federal agencies simultaneously, with overlapping and sometimes contradictory requirements.

A Decade of Legislative Gridlock

From Bitcoin’s emergence through 2023, Congress failed repeatedly to pass comprehensive crypto legislation. Bills were introduced in virtually every session — from the Token Taxonomy Act to various stablecoin bills to market structure proposals — and none reached the Senate floor for a vote.

The gridlock had multiple causes. Fundamental disagreements about whether most tokens are securities or commodities. Turf battles between the SEC and CFTC over jurisdictional expansion. Partisan divergence — with Republicans more favourable to crypto industry positions and Democrats more sceptical, though with significant exceptions in both parties. And the lack of a forcing event sufficient to create legislative urgency.

The FTX collapse in November 2022 was a partial exception. The bankruptcy of Sam Bankman-Fried’s exchange — which had been one of Washington’s most prolific lobbying operations — created bipartisan demand for exchange regulation and consumer protection. But even FTX’s collapse did not produce legislation, because disagreements about the substance of appropriate rules remained unresolved.

The 2024 Political Earthquake

The 2024 election changed everything. The crypto industry, frustrated by years of SEC enforcement under Gensler, made digital asset policy a priority in ways that had no precedent in American politics. The Fairshake PAC — backed by Coinbase, Andreessen Horowitz, Ripple, and other industry participants — raised approximately $202 million and spent heavily in congressional races, targeting anti-crypto incumbents and supporting pro-crypto candidates across both parties.

The results were striking. Several high-profile anti-crypto Democrats lost primary or general election races. The new Congress was substantially more favourable to crypto industry positions. And the presidential election produced an administration that had made explicit pro-crypto commitments, including promises to establish a national Bitcoin reserve, end the SEC’s enforcement approach, and pass comprehensive legislation.

Donald Trump’s victory and his administration’s approach to crypto — executive orders establishing a strategic Bitcoin reserve, appointing Paul Atkins to lead the SEC, rescinding SAB 121 (an accounting guidance that had made bank crypto custody economically prohibitive) — created the political environment in which comprehensive legislation became possible.

The GENIUS Act

The Guiding and Establishing National Innovation for US Stablecoins Act — the GENIUS Act — was signed into law by President Trump on July 18, 2025. It is the United States’ first comprehensive federal digital asset legislation.

The GENIUS Act establishes a federal framework for payment stablecoins. Key provisions: stablecoin issuers must be either federally or state chartered entities; issuers must maintain one-to-one reserves in high-quality liquid assets; reserve composition and verification standards are specified; consumer redemption rights are protected at par; and non-bank stablecoin issuers face a new federal licensing pathway under OCC oversight.

The GENIUS Act resolves years of uncertainty about whether stablecoins are securities. It explicitly creates a stablecoin as a distinct instrument — not a security, not a commodity, but a payment stablecoin subject to the GENIUS Act framework. The impact on the global stablecoin market has been significant: for the first time, stablecoin issuers have a clear US regulatory pathway.

The CLARITY Act and Market Structure

The Digital Asset Market Clarity Act — the CLARITY Act — addresses the larger question of how to regulate crypto assets that are not payment stablecoins. Its core innovation is creating a process for determining whether a digital asset is a security (SEC jurisdiction) or a digital commodity (CFTC jurisdiction), providing clarity on the most contested question in US crypto regulation.

The CLARITY Act had passed the House as of early 2026 and was pending Senate consideration. The legislative outcome is not certain — Senate dynamics on crypto remain complex — but the political environment is substantially more favourable to passage than at any previous point.

The SEC Under Paul Atkins

Paul Atkins replaced Gary Gensler as SEC Chair in 2025. The transformation of the SEC’s approach to crypto has been one of the most rapid regulatory reversals in recent memory. Atkins has described crypto as a legitimate and important financial innovation, dismissed many of the enforcement theories that characterised the Gensler era, and established a crypto task force focused on guidance rather than litigation.

Specific reversals include: the withdrawal of several SEC enforcement actions against crypto firms; the approval of spot Bitcoin and Ethereum ETFs (begun under Gensler but completed and expanded under Atkins); and the development of guidance on when token sales constitute securities offerings. The SEC under Atkins has moved toward treating crypto as a legitimate industry requiring clear rules rather than an enforcement target.

The State Patchwork

Beneath the federal level, states have developed their own crypto regulatory frameworks — sometimes complementary to federal rules, sometimes inconsistent. Wyoming has been the most innovation-friendly, passing a series of laws recognising DAOs as legal entities, creating special purpose depository institutions for crypto businesses, and establishing property rights in digital assets. New York’s BitLicense has been the most burdensome state regime, requiring extensive compliance infrastructure and generating significant industry criticism.

The state patchwork creates compliance complexity for crypto businesses operating nationally. Pre-GENIUS Act, the absence of federal stablecoin rules meant that issuers faced 50 different state money transmission licensing regimes. The GENIUS Act creates a federal floor but preserves state authority in some areas.

International Implications

US regulatory clarity matters globally for several reasons. The US dollar’s role in stablecoin markets — most major stablecoins are dollar-pegged — means that US stablecoin regulation has extraterritorial effect on global markets. The GENIUS Act’s standards will influence what stablecoin practices are commercially viable worldwide.

American regulatory standards also influence other jurisdictions. The EU’s MiCA was partly developed in conscious anticipation of what US rules might look like. The UK’s framework references the GENIUS Act. Singapore’s MAS has monitored US developments closely.

The shift from enforcement-first to legislation-first in the world’s largest financial market is the single most consequential development in global digital asset policy since MiCA’s passage. Its effects will compound over the decade ahead.

Outlook

The United States has the legislative momentum, the institutional infrastructure, and the political will to become the world’s leading jurisdiction for digital asset activity. Whether it achieves that position depends on execution: implementing the GENIUS Act’s standards, passing the CLARITY Act, and maintaining regulatory consistency across agencies and administrations.

The risk is that political cycles reverse the current direction. The 2024 election outcome that produced the GENIUS Act could be reversed by future elections — and regulatory frameworks built on executive action rather than durable legislation are inherently vulnerable to political change. The more legislation that passes — the more the pro-innovation framework is embedded in statute — the more durable the shift becomes.