The evolution of US cryptocurrency policy: From fragmentation to legislative momentum

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The development of cryptocurrency policy in the United States has been a complex journey. Over more than a decade, U.S. regulators and lawmakers have wrestled with how to balance innovation and consumer protection, how to delineate agency jurisdiction, and how to respond to recurring crises in crypto markets. After years of overlapping guidance and enforcement actions, 2025 has marked a turning point—Congress has passed the first major federal crypto law, and debates over roles, definitions, and boundaries are intensifying.

Early Foundations: Enforcement and Fragmented Guidance (2013–2017)

Cryptocurrency first drew regulatory attention in the U.S. in 2013, when the Financial Crimes Enforcement Network (FinCEN) issued guidance (FIN-2013-G001). Under that guidance, cryptocurrency exchanges and “administrators” were told to comply with anti-money laundering (AML) and “know your customer” (KYC) rules under existing money transmission statutes. 

At that time, the regulatory framework remained informal. The Securities and Exchange Commission (SEC) occasionally issued investor alerts warning about fraudulent initial coin offerings (ICOs), while the Commodity Futures Trading Commission (CFTC) explored whether cryptocurrencies might qualify as commodities. Meanwhile, enforcement actions—such as prosecuting fraud or money laundering—were the default regulatory tool.

Because no comprehensive crypto-specific statute existed, much depended on how regulators characterized a given token or activity. Was it a security, a commodity, a currency, or something else? That ambiguity produced legal risk for market participants.

The ICO Boom, Crypto Winter, and Regulatory Pressure (2017–2021)

The 2017 surge in ICO issuance intensified regulatory pressure. The SEC became more assertive, treating many token sales as securities offerings subject to securities law. In cases like SEC v. Kik and SEC v. Telegram, the SEC pressed the view that tokens sold in unregistered offerings violated securities laws. (Though these are illustrative, the tensions around ICO regulation were widely reported.)

At the same time, the CFTC asserted jurisdiction over derivatives or swaps referencing digital assets, treating them similarly to futures on other commodities. These dual claims added uncertainty for firms operating in multiple segments.

The collapse of token prices in 2018–2019 – the so-called “crypto winter” – cooled investor enthusiasm but did not alleviate regulatory ambiguity. Some firms shut down, others migrated offshore, and commentators criticized the U.S. regulatory environment as hostile or opaque.

During this era, U.S. states also experimented. New York’s BitLicense (launched in 2015) was one of the earliest state-level licensing regimes, imposing requirements on crypto firms operating in New York.  States like Wyoming passed more crypto-friendly statutes, trying to attract firms by granting clearer rights or exemptions.

Crises, Failures, and Calls for Reform (2021–2024)

In 2021–2022, a series of high-profile failures—ranging from collapsed lending protocols, algorithmic stablecoin disasters, rug pulls, and platform insolvencies—shook confidence. When firms like TerraUSD/Luna imploded, or when centralized platforms froze withdrawals or declared bankruptcy, the gaps and conflicts in regulatory oversight became glaring.

Congressional hearings, regulatory proposals, and calls for a coherent digital asset framework intensified. Critics said that enforcement-driven regulation was too reactive and piecemeal. Some urged a new statute that would settle jurisdiction (SEC vs. CFTC), define stablecoins, and set baseline protections for users.

In 2022, President Joe Biden issued Executive Order 14067, titled “Ensuring Responsible Development of Digital Assets.” The order did not itself impose rules, but instructed federal agencies to study and coordinate on priorities including consumer protection, financial stability, illicit finance, and exploration of a central bank digital currency (CBDC).  That order marked a shift toward a more strategic, interagency approach.

Meanwhile, in Congress, bills like the Financial Innovation and Technology for the 21st Century Act (FIT21) were introduced. FIT21, passed by the House in May 2024, proposed to assign the CFTC jurisdiction over digital assets deemed “commodities” (if they run on functional decentralized blockchains) and assign the SEC jurisdiction over securities tokens.  Though FIT21 stalled in the Senate, it underscored legislative appetite for clarity.

2025: A Turning Point — GENIUS Act and Structural Shifts

By mid-2025, crypto policy in the U.S. began rapidly evolving from pure enforcement and guidance to statutory foundation.

The GENIUS Act: First Major Crypto Legislation

On July 18, 2025, President Donald Trump signed into law the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins). This is widely considered the first comprehensive USf ederal statute specifically targeting crypto (especially stablecoins). 

The Act establishes a regulatory framework for “payment stablecoins” (i.e. tokens pegged to the U.S. dollar and used for payments). It mandates:

• That only approved issuers may issue payment stablecoins.  
• One-to-one backing with U.S. dollars or “eligible assets” (e.g. short-term Treasuries).  
• Monthly audits, transparency requirements, consumer protection, anti-money laundering compliance, and oversight by federal regulators.  

The GENIUS Act thus moves U.S. policy from ad hoc rulings to defined rules in a critical subset of crypto (i.e. stablecoins).

Realigning Agency Roles

Alongside GENIUS, broader debates about dividing regulatory authority have advanced. Under past practice:

• SEC claimed jurisdiction over tokens that act like securities, especially ICOs.
• CFTC treated many cryptocurrencies as commodities, regulating derivatives.
• Treasury / FinCEN regulated money-transmission and AML.
• Banking regulators (OCC, FDIC) assessed how banks could interact with crypto.

Post-GENIUS and with proposed companion bills (e.g. the CLARITY Act), Congress is more clearly laying out which assets belong under which regulator.  The CLARITY Act passed the House and would codify how digital assets are treated under securities / commodities laws. 

The Anti-CBDC Surveillance Act, also passed by the House, aims to block the Federal Reserve from deploying a retail CBDC without congressional authorization—a political limit on executive ambition. 

Thus, the 2025 legislation marks a shift: stablecoins are now on a statutory footing, and a clearer division of agency responsibilities is emerging.

Executive Actions & Other Moves

In early 2025, President Trump issued executive orders to promote U.S. leadership in digital assets and to establish a Strategic Bitcoin Reserve and a Digital Asset Stockpile. The idea is to allocate government-held crypto (often from seizure or forfeiture) into a reserve rather than liquidating immediately. 

Also, within days of taking office, the SEC formed a “Crypto Task Force” to help develop clearer crypto regulation.  Several regulatory bodies (like OCC and FDIC) also relaxed path restrictions, allowing banks to engage in some crypto activities more freely. 

These actions reflect a more proactive, rather than reactive, posture by the federal government.

Key Challenges and Tensions Ahead

Despite progress, U.S. crypto policy remains fraught with difficult trade-offs and unresolved issues:

• Regulatory overlap and uncertainty: Even with legislation, edge cases (hybrid tokens, decentralized finance, yield protocols) may muddy lines between securities, commodities, and money.
• Innovation vs. risk: Overly rigid rules may stifle experimentation in blockchain, DeFi, or new token models.
• Consumer protection and market integrity: Ensuring stablecoins do not collapse, preventing runs, and stopping fraud remain pressing tasks.
• International coordination: Crypto is global; the U.S. must align with standards (e.g. FATF, FSB) while maintaining competitive advantage.
• CBDC politics: While some push for a U.S. central bank digital currency, others fear surveillance or overreach. The Anti-CBDC bills show political resistance.
• Taxation and reporting: The IRS already treats crypto as property, with every trade or disposition triggering capital gains considerations. The complexity of DeFi can make compliance burdensome.  

A New Phase of Maturation

From fragmented guidance in the early 2010s, through crisis-driven enforcement, to the first substantive federal legislation in 2025, U.S. crypto policy is entering a new phase. The GENIUS Act is a milestone because it defines stablecoins in statute, demands backing and oversight, and forces regulators to coordinate. Accompanying proposals (CLARITY, Anti-CBDC, FIT21) suggest Congress is increasingly willing to shape the digital-asset future rather than leaving it to courts or administrative agencies alone.

However, passing a law is easier than executing it. The real test lies ahead: implementing rules, resolving gray zones, and responding to next-generation innovations. Whether the U.S. can strike the right balance among innovation, stability, and protection will determine whether it becomes a crypto policy leader—or a cautionary tale.

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