The U.S. blockchain market has moved from experimentation to production. Adoption is strongest in financial services, where banks, asset managers, payment companies and market infrastructure providers are using blockchains to move money, issue and settle assets and manage collateral. The policy environment has changed just as quickly. Since early 2025, federal agencies have shifted from enforcement-led oversight to formal guidance and rulemaking, and Congress has enacted a federal stablecoin statute, although broader market structure legislation has not passed (see questions 2 and 3). The result is a market that is growing quickly within a legal framework that is still being built.

Stablecoins and Payments. Stablecoins are the most widely used blockchain application. Global stablecoin supply stood at roughly $300 billion in October 2026, almost all of it denominated in U.S. dollars, and stablecoins are increasingly used for cross-border payments, treasury management and settlement between businesses. The GENIUS Act now provides a federal framework for payment stablecoin issuers (see questions 2 and 6).

Tokenization and Market Infrastructure. Asset managers and market infrastructure providers are tokenizing Treasuries, money market funds, private credit and other assets. By mid-2026, the value of tokenized real-world assets distributed on public blockchains exceeded $30 billion, with tokenized U.S. Treasuries the largest category. Banks are also issuing tokenized deposits, and DTC is piloting tokenized securities entitlements (see question 8).

Investment and Trading. Crypto trading is now part of mainstream finance, including through exchange-traded products offered by major asset managers (see question 9). Token offerings to U.S. purchasers, largely dormant for several years, are also beginning to return (see question 10).

The remainder of this chapter addresses the legal framework in more detail. Questions 2 and 3 describe the principal legislation, the regulators and their current approach. Question 4 addresses central bank digital currencies. Questions 5 through 7 cover the regulatory, AML and tax treatment of crypto assets and DeFi. Questions 8 through 10 address tokenization, trading and token offerings. Questions 11 through 13 cover transfers and security interests, smart contracts and DAOs. Question 14 summarizes enforcement, and questions 15 and 16 address other applicable laws and practical considerations.

The U.S. still has no single, comprehensive blockchain statute. The framework is layered. Existing federal securities, commodities, banking, anti-money laundering, sanctions and tax laws apply based on the nature of the assets and how it is distributed and used. One blockchain-specific federal statute, the GENIUS Act, sits on top of these existing regimes, along with a growing body of agency rulemaking and interpretation. State licensing and commercial law regimes add a third layer.

Regulators. At the federal level, the principal regulators are the Securities and Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”). They are joined by the prudential banking regulators (the OCC, the Federal Reserve, the FDIC and, for credit unions, the NCUA), and by Treasury through FinCEN, OFAC and the IRS. The Department of Justice remains a significant actor through criminal enforcement. At the state level, the most consequential regulators are the New York Department of Financial Services and California’s Department of Financial Protection and Innovation, together with state money transmission regulators and state securities regulators.

Stablecoins: The GENIUS Act. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, signed July 18, 2025, is the first federal statute built specifically for a blockchain-native product. It limits issuance of payment stablecoins to permitted issuers. It requires one-to-one reserves, redemption rights and disclosure, and requires issuers to comply with the Bank Secrecy Act. The regime takes effect on January 18, 2027.

Market Structure: The CLARITY Act. The broader effort to allocate jurisdiction over non-stablecoin digital assets between the SEC and CFTC has stalled. The House passed the Digital Asset Market Clarity Act in July 2025 by a wide bipartisan margin. The Senate Banking Committee advanced its version in May 2026 with every Republican and two Democrats in support. On September 15, 2026, the Senate rejected cloture on the motion to proceed 49-50, eleven votes short of the 60 needed to open debate. The disagreement was not mainly about market structure itself. Two disputes drove the outcome: ethics rules for officials’ digital asset holdings, and whether stablecoin rewards or yield should be permitted.

Agency Frameworks. In the absence of legislation, federal agencies have moved quickly to fill the gap through rulemaking and formal interpretation. The SEC and CFTC signed a Memorandum of Understanding on March 11, 2026 committing to coordinate and harmonize policy, including a fit-for-purpose crypto framework. Six days later, the agencies issued a joint interpretation establishing a token taxonomy. It divides crypto assets into digital commodities, digital collectibles, digital tools, stablecoins and digital securities. Only digital securities are securities in their own right, although the other categories may be sold subject to an investment contract. The SEC followed with proposed Regulation Crypto Assets in August 2026, which we discuss in question 10. On September 17, 2026, the SEC issued five-year conditional exemptive relief under which venues trading tokenized NMS stock through permissioned automated market makers are exempt from the definition of “exchange,” and their liquidity providers from the definition of “dealer”.

The CFTC is attempting to build what it can within its existing statute. The agency released an advance notice of proposed rulemaking on October 5, 2026 outlining two contemplated frameworks, Regulation Crypto Asset Transactions (“Regulation CTX”) and Regulation Crypto Asset Markets (“Regulation CAM”). Regulation CTX would apply section 2(c)(2)(D) of the Commodity Exchange Act, which governs retail commodity transactions offered on a leveraged, margined or financed basis, to crypto assets, and would set out the CFTC’s preliminary views on what constitutes a covered “offer” of leverage and what qualifies as “actual delivery.” Regulation CAM would create a “crypto asset market,” a new subcategory of designated contract market with core principles adapted for crypto, for exchanges listing only these transactions.

State Frameworks. New York’s BitLicense, California’s Digital Financial Assets Law (“DFAL”) and Louisiana’s Virtual Currency Businesses Act and Illinois’ Digital Assets and Consumer Protection Act remain the principal state licensing regimes. State money transmission laws continue to apply to many custodial business models. Most states have now adopted UCC Article 12, which governs control and transfer of digital assets (see question 11). Wyoming, Tennessee, Vermont and others offer DAO-specific entity forms (see question 13).

Outlook. Over the next twelve to eighteen months, the most consequential developments are likely to be the GENIUS Act’s effective date and final implementing rules, adoption of Regulation Crypto Assets, and the CFTC’s crypto asset market rulemaking. Market structure legislation will likely need to be reintroduced in the 120th Congress after the November 2026 midterms. Until then, the U.S. framework rests largely on agency action. That action is more constructive than at any point in the past decade, but it is also more exposed to legal challenge and to reversal by a future administration than a statute would be.

The current posture of the federal government is the most supportive in the history of the industry. The defining feature of the past year is that the shift has moved from rhetoric to rules. The current administration’s early actions are now largely embedded in agency practice. Those actions included the January 2025 executive order on digital financial technology, the President’s Working Group report of July 2025 and the Strategic Bitcoin Reserve. Regulators are now writing frameworks rather than bringing test cases. That said, “supportive” should not be read as “deregulatory.” Illicit finance remains a hard edge, and the durability of the current approach is an open question.

Market Regulators. The SEC has replaced enforcement-led policymaking with formal interpretation and rulemaking. Examples include its joint token taxonomy with the CFTC, proposed Regulation Crypto Assets and exemptive relief for onchain trading of tokenized equities. Chairman Atkins has framed the proposed rules as a framework that will let crypto innovation flourish in the U.S. The CFTC under Chairman Michael Selig has been equally direct. Selig said the agency will deliver a market structure with or without legislation. The CFTC has begun rulemaking to create a new category of designated contract market for crypto assets. Its staff is also clearing practical obstacles. In September 2026, staff extended no-action relief to all “passive software providers” whose software lets users route their own orders to registered intermediaries, subject to conditions including that the provider exercises no routing or execution discretion. For self-custodial wallet developers, that is a meaningful acknowledgement that writing interface software is not equivalent to acting as an intermediary.

Banking Regulators. The banking agencies have moved from discouraging crypto activity to chartering it. In December 2025, the OCC conditionally approved two de novo national trust banks, for Circle and Ripple, and the conversion of BitGo, Fidelity Digital Assets and Paxos from state trust companies to national trust banks. The Federal Reserve, historically the most cautious of the federal banking regulators, has also shifted. It granted Kraken’s Wyoming special purpose depository institution a 12-month pilot limited master account in March 2026, and in May 2026 proposed a limited “skinny” payment account. The account would provide access to Fed payment rails without discount window access or intraday credit.

Treasury. Treasury’s attitude towards digital assets is more nuanced. It has stepped back from rules that targeted the technology itself. In October 2026, FinCEN withdrew both its long-pending 2020 “unhosted wallet” proposal and its 2023 proposal to designate crypto mixing as a primary money laundering concern. That followed a March 2026 report to Congress acknowledging that lawful users may rely on mixers for financial privacy. At the same time, OFAC has been more aggressive than ever in targeting illicit actors who use crypto rails (see question 6). The posture is permissive toward the technology and unforgiving toward its misuse.

Department of Justice. DOJ’s April 2025 memorandum, “Ending Regulation by Prosecution,” directed prosecutors to avoid cases that would effectively impose regulatory frameworks on digital asset platforms. Policy and practice have not fully converged, however. The Southern District of New York is still pursuing a retrial of Tornado Cash developer Roman Storm on the money laundering and sanctions counts on which the first jury deadlocked. The retrial has been postponed to April 26, 2027 while the court considers Storm’s motion for acquittal.

Congress. The GENIUS Act proved that Congress can legislate on crypto on a bipartisan basis. The failure of the CLARITY Act shows the limits of that consensus once crypto becomes entangled with broader political questions. Those questions include the personal crypto holdings of senior officials and the competitive interests of the banking sector. The November 2026 midterms will shape whether market structure legislation returns in 2027.

States. States remain more varied. Several have stepped into enforcement gaps left by federal retrenchment. California’s DFAL licensing regime came into force in July 2026. A number of states have enacted crypto kiosk and consumer protection laws, while others continue to compete for industry through sandboxes, DAO statutes and strategic reserve legislation.

The practical takeaway for market participants is that the U.S. currently offers permission but not yet permanence. Most of today’s favorable framework rests on agency interpretations and proposed rules that a future administration could revisit. Firms should take advantage of the current window while structuring their products and disclosures to withstand the potential for a less sympathetic regulator in a future administration.

The U.S. does not currently have a CBDC, and recent legislation prohibits the creation of a CBDC any time soon. The “21st Century ROAD to Housing Act,” which became law on July 11, 2026, expressly prohibits the Federal Reserve from issuing a CBDC before December 31, 2030. Legislative opposition to the creation of CBDC makes it unlikely this prohibition will be repealed in the near future. The “Permanent CBDC Ban Act,” introduced on August 3, 2026 by Rep. Michael Cloud and 30 original co-sponsors, signals congressional hostility towards the creation of a CBDC.

The closest U.S. analogue to a public digital currency is at the state level. In August 2025, the Wyoming Stable Token Commission launched the Frontier Stable Token (“FRNT”), the first stable token issued by a U.S. public entity. FRNT is not a CBDC, however. It is issued by a state rather than the Federal Reserve, it is a fully reserved token, backed by U.S. dollars and short-duration Treasuries, rather than a direct central bank liability, and it circulates on existing public blockchains.

The U.S. has no single regulatory regime for crypto assets or DeFi. Regulation turns on the characteristics of the asset and the activity being conducted, and a single business may be subject to several regimes at once. In the absence of market structure legislation, the federal agencies have spent 2026 filling the gap through formal interpretation, staff relief and rulemaking (see question 2).

Classification. The starting point is the SEC and CFTC’s March 2026 joint interpretation, which divides crypto assets into digital commodities, digital collectibles, digital tools, stablecoins and digital securities. Only digital securities are securities in their own right. The other categories may be sold subject to an investment contract, but that contract can end once the issuer has fulfilled the managerial efforts it promised (see question 10). Classification is not fixed: As the facts surrounding an asset change, so may its status.

Securities Regulation. The SEC regulates digital securities and investment contracts, and the platforms and intermediaries that deal in them. Those businesses remain subject to the existing exchange and broker-dealer framework, which the SEC is now adapting through exemptive relief (see questions 2 and 8) and its proposed Regulation Crypto Assets (see question 10) rather than through enforcement.

Commodities Regulation. The CFTC regulates crypto derivatives, including futures, swaps and leveraged or margined retail transactions, and the exchanges and intermediaries that offer them. For non-security crypto assets traded on a spot basis, its authority is largely limited to fraud and manipulation; there is no federal registration regime for spot markets. The CFTC’s contemplated Regulation CTX and Regulation CAM are an attempt to build what it can within its existing statute (see question 2).

Stablecoins and Custodial Businesses. Payment stablecoins are subject to a dedicated federal framework under the GENIUS Act, which takes effect on January 18, 2027 (see questions 2 and 6). Businesses that hold or transmit crypto assets for others are generally money transmitters, subject to FinCEN registration (see question 6) and to state licensing, including New York’s BitLicense and California’s ( (see questions 2 and 3). Banks and national trust banks may also provide crypto custody (see question 3).

DeFi. DeFi is regulated on the same activity-based basis rather than as a separate category. Decentralization does not automatically take an activity outside the regulatory perimeter. However, the agencies now draw a much clearer line between intermediaries and software, and between systems that are controlled by a central party and those that are not.

Front ends. On April 13, 2026, the SEC stated that they will not object to providers of “covered user interfaces,” including DeFi front ends, browser extensions and self-custodial wallet integrations used to prepare transactions in crypto asset securities, operating without broker-dealer registration. The interface must convert user-specified parameters into blockchain commands without routing orders or exercising discretion, and the provider must not have custody of or access to users’ private keys, solicit or recommend particular transactions, or accept payment for order flow. The CFTC took a parallel approach for derivatives on September 17, 2026. In Staff Letter 26-25, its Market Participants Division extended to all qualifying “passive software providers” the no-action relief previously granted only to Phantom Technologies. Staff will not recommend enforcement against these providers for failing to register as introducing brokers where their software lets users trade with registered intermediaries and designated contract markets, provided the software does not custody assets, generate trading signals or exercise routing or execution discretion. Both positions mirror FinCEN’s custody-and-control analysis (see question 6): Software that passively executes a user’s own instructions is not, on its own, an intermediary.

Onchain Venues. The SEC has also begun to accommodate DeFi market structure directly. Its September 17, 2026 exemptive relief for venues trading tokenized stock through permissioned automated market makers (see question 2) addresses the protocol itself, not only the interface used to access it.

Autonomous Systems. The March 2026 joint interpretation treats a crypto system as “decentralized” if it functions and operates autonomously, with no person, entity or group having operational, economic or voting control. FAQs issued by the SEC’s Division of Corporation Finance on September 25, 2026 build on that concept. Once a system is functional, work to secure, maintain, improve or enhance it would not constitute essential managerial efforts. Where a functional system has no central party, issuer statements about it likely would not create a new investment contract. The proposed Regulation Crypto Assets approaches the issue from the disclosure side: Issuers would have to disclose governance mechanisms and smart contract permissions, including admin keys, upgradeability and other ways a system remains subject to human control (see question 10).

Practical Considerations. Much of this framework rests on staff statements, no-action positions and time-limited exemptions. These positions are conditional, bind only the issuing agency and can be withdrawn. DeFi projects relying on them should document how they satisfy each condition and expect the analysis to be revisited if market structure legislation is enacted or when a new administration rises to power.

AML and sanctions are the areas where the U.S. approach to crypto has changed the least, even as the tone of policy elsewhere has softened considerably. The central question remains the same as it has been since FinCEN’s first guidance in 2013: who has control over the movement of value?

The Bank Secrecy Act framework. FinCEN treats exchangers and administrators of convertible virtual currency (CVC) as money transmitters. Since its 2019 guidance, it has applied this standard functionally. A person that accepts and transmits value on behalf of others is a money services business. That person must register with FinCEN, maintain a risk-based AML program, file suspicious activity reports and comply with the recordkeeping and “travel rule” requirements for transfers of $3,000 or more. A person that merely provides software, where users retain independent control of their private keys, generally is not. That custody-and-control line has become the most important concept in U.S. crypto AML law. It explains why custodial exchanges and hosted wallets sit squarely within the regime while genuinely non-custodial wallets and protocols, for the most part, do not. FinCEN is also recalibrating AML programs generally. Its April 2026 proposal to reform program requirements for all covered financial institutions would give firms more flexibility to concentrate resources on higher-risk activity and would de-emphasize policing of minor deficiencies.

Stablecoin issuers under the GENIUS Act. The most significant new AML development is the regime for payment stablecoin issuers. In April 2026, FinCEN and OFAC jointly proposed rules that would treat permitted payment stablecoin issuers as BSA financial institutions, require AML/CFT programs and, for the first time, explicitly require a category of U.S. persons to maintain an effective sanctions compliance program. The proposal reflects a sophisticated understanding of how stablecoins actually move. It distinguishes between primary-market activity, where the issuer deals directly with a holder (minting, redemption, burning), and secondary-market activity, which covers everything else. Customer due diligence, beneficial ownership verification and suspicious activity reporting would apply only to primary-market activity. Under the proposal, a transfer would not count as a transaction “through” the issuer for SAR purposes if the issuer interacts with it only via a smart contract. Sanctions obligations would reach much further. Issuers would need the technical ability to block, freeze and reject transactions in both primary and secondary markets involving the stablecoins they issue. The proposal also treats an issuer as having “control” of its stablecoins wherever they circulate. It states that a U.S. issuer would be providing prohibited services if it allowed a blocked person to interact with its smart contract to trade on the secondary market.

This is a significant technical point. Most major fiat-backed stablecoins already include administrative freeze and blacklist functions in their token contracts. The proposal effectively converts that design choice into a legal obligation, backed by strict liability. Issuers, and the DeFi protocols that integrate their tokens, should expect sanctions screening to become a protocol-level function rather than a purely front-end responsibility.

DeFi and privacy tools. There is still no DeFi-specific AML regime. Non-custodial protocols are assessed under the general control-based analysis described above, and the policy direction over the past year has been toward restraint. In October 2026, FinCEN withdrew its proposal to designate digital asset mixing as a class of transactions of primary money laundering concern. It cited the President’s Working Group’s finding that lawful users may use mixers for financial privacy on public blockchains. Treasury’s 2026 National Money Laundering Risk Assessment still identifies mixers among the tools criminals commonly use to conceal illicit crypto, and FinCEN has said it will continue to monitor mixing activity.

Criminal liability for developers remains the area of greatest uncertainty. A jury convicted Tornado Cash developer Roman Storm in August 2025 of conspiracy to operate an unlicensed money transmitting business but deadlocked on the money laundering and sanctions counts. His acquittal motion is pending, and a retrial is scheduled for April 2027. The Samourai Wallet developers pleaded guilty to unlicensed money transmission charges in 2025. These cases sit uneasily with DOJ’s stated policy of not prosecuting platforms for the acts of their end users. The CLARITY Act would have resolved part of this uncertainty. Both the House-passed bill and the Senate Banking Committee’s version incorporated the Blockchain Regulatory Certainty Act, under which a developer that lacks the unilateral and independent ability to control user assets would not be treated as a money transmitting business. That protection did not become law when the bill stalled in the Senate (see question 2). As a result, developers of privacy-preserving or non-custodial tools should not yet treat the absence of custody as a complete bar to criminal exposure, particularly where there is evidence of knowledge that illicit funds are flowing through the tool.

Sanctions. OFAC sanctions apply to crypto exactly as they apply to any other property, on a strict liability basis, and U.S. persons must not deal with SDN-listed persons or wallet addresses. Since 2018, OFAC has routinely included wallet addresses in its designations. It has also targeted the infrastructure layer as well as individual actors. That strategy has limits: in Van Loon v. Department of the Treasury, the Fifth Circuit held that Tornado Cash’s immutable smart contracts were not “property” that could be sanctioned, and OFAC delisted Tornado Cash in March 2025. That decision constrains OFAC’s ability to sanction code itself, but it has not reduced the agency’s appetite for targeting the people and businesses around it.

Practical considerations. For businesses in the U.S. market, effective compliance now means more than customer onboarding. It warrants blockchain analytics for transaction monitoring and wallet screening, an understanding of indirect exposure (including OFAC’s 50 percent rule as applied to entities that control wallets), geolocation controls for front-end interfaces, and clear internal procedures for responding to freeze requests and seizure warrants. Even businesses that fall outside the BSA, such as non-custodial software providers, should assess their sanctions exposure independently. OFAC’s jurisdiction does not depend on MSB status.

The United States generally taxes cryptocurrency and other digital assets under the existing Federal Income Tax rules applicable to property rather than under a separate cryptocurrency tax regime. The IRS has consistently taken the position that digital assets are property, and, therefore, general tax principles applicable to property transactions apply.  IRS Notice 2014-21.

For an investor, cryptocurrency generally constitutes a capital asset.  A sale of cryptocurrency for cash, or an exchange of one digital asset for another materially different asset, generally results in recognition of capital gain or loss equal to the difference between the amount realized and the taxpayer’s adjusted basis.  IRC sections 1001, 1221, 1222; IRS Notice 2014-21.  Digital assets held as inventory or primarily for sale to customers in the ordinary course of a trade or business are not capital assets, and gain or loss from their disposition generally is ordinary.  IRC section 1221(a)(1).

The receipt of digital assets may itself produce taxable income.  Cryptocurrency received as compensation for services is generally ordinary compensation income measured by its fair market value when received.  Mining rewards are similarly taxable, and the IRS has ruled that staking rewards constitute gross income when the taxpayer obtains “dominion and control” (together, “control”) over the rewarded tokens.  IRC section 61; IRS Notice 2014-21; Rev. Rul. 2023-14.  Airdropped tokens likewise generally result in ordinary income when the recipient obtains control over the tokens, measured by their fair market value at that time.  IRC section 61; Rev. Rul. 2019-24 (addressing an airdrop associated with a hard fork).  The taxpayer generally takes a corresponding basis in tokens included in income equal to the amount of income included.

On the other hand, the minting or creation of a taxpayer’s own token, without more, should generally not itself constitute a realization event.  Unlike mining or staking, where tokens are received as a reward for performing validation or other activities, self-minting generally involves the creation of the taxpayer’s own property rather than the receipt of an accession to wealth from another source.  The IRS has not issued specific guidance squarely addressing self-minted tokens, however, and this conclusion rests on general U.S. tax principles such as IRC sections 61, 1001, Treas. Reg. section 1.1001-1 and Cottage Savings Association v. Commissioner, 499 U.S. 554 (1991).  A subsequent sale, exchange, or other disposition of the minted tokens likely results in income or gain in the amount of its fair market value less basis at the time of the disposition.  In this case, the taxpayer’s basis in the self-created token is likely $0, unless the taxpayer capitalized development costs rather than expensing them.

Special rules also apply to blockchain forks.  A soft fork does not result in taxable income because the taxpayer does not receive a new digital asset.  Similarly, a hard fork, standing alone, produces no taxable income if the taxpayer receives no new digital asset.  If the taxpayer does receive new digital assets following a hard fork, however, the taxpayer recognizes ordinary income equal to their fair market value when the taxpayer obtains control over them.  IRC section 61; Rev. Rul. 2019-24; IRS Frequently Asked Questions on Virtual Currency Transactions, Q&A 22-24.

The taxation of decentralized finance (DeFi) remains substantially less settled. As stated, staking rewards are taxable as ordinary income when the taxpayer obtains control over the rewards.  Rev. Rul. 2023-14.  Other common DeFi transactions such as contributing digital assets to liquidity pools, receiving liquidity-provider tokens, wrapping and unwrapping tokens, and lending digital assets, present more difficult questions as to whether the transaction constitutes a taxable exchange, a loan, a contribution to a partnership or other entity, or merely a continuation of the taxpayer’s ownership of the underlying assets. Treasury and the IRS have expressly identified several of these transactions as requiring further study.  IRS Notice 2024-57.  In the absence of more definitive guidance, a conservative approach is generally to treat a transfer of digital assets in exchange for a materially different token or other property – such as the receipt of a liquidity-provider token representing an interest in a pool – as a potentially taxable disposition under IRC section 1001 unless the particular structure supports nonrecognition.

The U.S. generally takes a technology neutral approach to tokenization. Tokenizing an asset does not change its underlying regulatory treatment. For example, a tokenized security remains subject to the federal securities laws in substantially the same manner as the equivalent traditional security. SEC staff confirmed that approach in a January 28, 2026 joint statement from the Divisions of Corporation Finance, Investment Management and Trading and Markets, which applies the federal securities laws to tokenized securities whether ownership is recorded onchain or offchain. CFTC staff took the same view in December 2025, noting that the use of distributed ledger technology to tokenize an asset need not change the asset’s fundamental characteristics.

Retail Tokenization. The SEC has recently taken steps to facilitate retail access to tokenized securities, including five-year conditional exemptive relief permitting certain tokenized U.S.-listed stocks to trade on onchain venues through permissioned automated market makers (see question 2). The January 2026 staff statement also distinguishes securities tokenized by or on behalf of the issuer from those tokenized by third parties. A third-party token that tracks a listed stock may give the holder no rights against the issuer, and staff emphasized that the economic reality of the instrument, not its label, determines how it is regulated. Some products marketed as “tokenized stocks” may therefore be security-based swaps, which may be offered to retail investors only if registered and traded on a national securities exchange.

Wholesale Tokenization. Wholesale projects are developing particularly quickly, including tokenized Treasuries, funds, collateral and other securities. DTCC has already conducted production transactions using tokenized DTC-held securities and is developing broader tokenization infrastructure for the U.S. securities market. That work rests on a December 11, 2025 SEC staff no-action letter permitting DTC to run a three-year pilot under which participants may hold and transfer tokenized entitlements to eligible DTC-custodied securities in registered wallets on approved blockchains. During the pilot, the tokens are not given collateral or settlement value for DTC risk management purposes. On the derivatives side, CFTC staff guidance issued December 8, 2025 addresses when futures commission merchants and derivatives clearing organizations may accept tokenized assets as collateral, subject to legal enforceability and segregation requirements, and the CFTC launched a digital assets collateral pilot program the same day.

Tokenized Deposits. Banks are also tokenizing money itself. The GENIUS Act excludes deposits, including deposits recorded using distributed ledger technology, from the definition of a payment stablecoin, so bank-issued deposit tokens fall outside that regime and remain subject to ordinary banking law (see question 2). JPMorgan’s deposit token, JPMD, has been available to institutional clients on Coinbase’s Base network since November 2025. In April 2026, the FDIC proposed rules that would clarify how tokenized deposits are treated under the Federal Deposit Insurance Act, including for deposit insurance, depositor preference in a bank failure and whether a blockchain ledger can serve as a deposit account record. Tokenized money market funds have grown alongside stablecoins, in part because the GENIUS Act’s reserve requirements permit registered government money market funds and tokenized forms of certain eligible reserve assets. On December 8, 2025, CFTC staff also issued no-action relief permitting futures commission merchants to accept non-security digital assets as customer margin, initially limited to payment stablecoins, Bitcoin and Ether.

Crypto usage and trading in the United States are common and becoming increasingly mainstream. Estimates of ownership vary widely by methodology. An SEC staff working paper published in July 2026 estimated that about 8.7% of the U.S. population owned crypto between January 2024 and April 2025, while industry surveys in 2026 put adult ownership at roughly 22% to 30%. Exchange-traded products have also broadened access. As of October 2026, U.S. spot bitcoin ETFs held roughly 1.29 million Bitcoin, with total net assets of about $105 billion.

While there is no general prohibition on crypto trading, certain assets and certain types of transactions are limited in how, where and to whom they can be traded.

Crypto assets that are the subject of an investment contract may be offered and traded only in compliance with the federal securities laws. Whether a crypto asset is the subject of an investment contract is assessed under the Howey test, as applied in the SEC’s March 2026 interpretive release, and that status can change as the facts surrounding the asset change (see question 5). Similarly, security-based swaps, including some products marketed as tokenized stocks, may be sold to retail investors only on a registered national securities exchange (see question 8).

Leveraged, margined or financed retail transactions in crypto commodities must generally be conducted on, or subject to the rules of, a CFTC-registered designated contract market unless actual delivery occurs within 28 days.

Under the GENIUS Act, starting on July 18, 2028, digital asset service providers generally may not offer or sell to persons in the United States payment stablecoins that were not issued by a permitted or qualifying foreign issuer (see question 2).

After the 2017–2018 boom, public token sales to U.S. retail purchasers largely disappeared. The SEC’s 2017 DAO Report and a long line of successful enforcement actions established that most ICOs were unregistered securities offerings. For several years, projects instead raised capital through private placements to accredited investors (often using SAFTs or SAFEs and token warrants), excluded U.S. persons from public sales, or distributed tokens through airdrops and points programs rather than direct sales.

That has now changed in two respects.

The Legal Theory Has Shifted. The SEC and CFTC’s March 2026 joint interpretation reflects the SEC’s view that most crypto assets are not themselves securities. A token that is a digital commodity, collectible or tool does not become a security merely because it was sold to raise money. What may be a security is the investment contract under which it was sold. Under the interpretation, the existence of that contract turns on the issuer’s own representations. A purchaser’s reasonable profit expectations depend on the issuer’s representations or promises to engage in essential managerial efforts, and vague promises that lack milestones, funding or a semblance of an actionable business plan likely would not create such expectations. The corollary is that an investment contract can end. If an issuer promises to achieve decentralization or a particular functionality, whether it has done so (or has abandoned such promises) is judged against how the issuer itself defined those terms, not against a general market conception. For token issuers, the drafting of the whitepaper and launch communications is now as important as the token design itself.

Proposed Regulation Crypto Assets. The most important development for future ICOs is the SEC’s proposed Regulation Crypto Assets, released on August 18, 2026. The proposal would apply to “covered investment contracts.” These are investment contracts under which the only asset involved is a crypto asset that is not itself a security; the exemptions would not be available, for example, for an offering combining a token with company stock. It has three operative parts.

The first is a startup exemption. It would exempt offerings of up to $5 million over a four-year period, intended to give issuers a four-year runway to deliver on their promised managerial efforts, and could cover airdrops and rewards to validators, sequencers or users. The issuer files a Notice of Reliance and publishes prescribed disclosure on its website. General solicitation would be permitted, there would be no accredited-investor limitation, and the tokens would not be restricted securities. The exemption is one-time per asset, and the issuer must file a transition report within four years.

The second is a fundraising exemption modeled on Regulation A. Tier 1 would permit up to $20 million and Tier 2 up to $75 million in any 12-month period, with separate caps on sales by affiliates. It would be available only to U.S.-organized and U.S.-administered issuers, and non-accredited investors could invest no more than 10 percent of the greater of their annual income or net worth. Issuers would file an offering statement on new Form 1-CRYPTO, with audited financials for Tier 2. Unlike Tier 1 of Regulation A, both tiers would carry ongoing annual, semiannual and current reporting, and at-the-market offerings would be prohibited.

The third is a safe harbor for when an investment contract ends. A covered investment contract would be deemed to have ceased to exist once the issuer has completed or permanently ceased the managerial efforts it promised and files a transition report explaining its analysis.

Both exemptions use a principles-based disclosure framework rather than line-item requirements. The ten required topics read like a technical due-diligence checklist. They include the security of the token and its network and the location of the source code, token supply and allocations, insider holdings, lockups and release schedules, minting and burning mechanisms, and governance mechanisms including smart contract permissions. In practice, that means disclosing admin keys, upgradeability and multisig arrangements, along with any other ways a decentralized system remains subject to human control. The proposal would also preempt state registration and qualification requirements for these offerings and for certain secondary trading.

The proposal has limits worth noting. The safe harbor would bind only the SEC: not private plaintiffs, state regulators or other federal agencies, and it would not shield pre-filing conduct. It also does not extend to the Investment Advisers Act or the Investment Company Act. The $75 million ceiling means large institutional raises will continue to rely on Regulation D or Regulation S.

Key Requirements Today. Until Regulation Crypto Assets is adopted, an issuer launching a token sale in or into the U.S. should address the following:

1. Securities analysis. Conduct a Howey analysis under the March 2026 interpretation, with particular attention to what the issuer and its team promise. Define any decentralization or functionality milestones precisely, because those definitions will determine when the investment contract ends.
2. Offering exemption. Where an investment contract exists (or where an issuer wants to play it safe), rely on an available exemption: Rule 506 for accredited investors, Regulation S for offshore sales (with appropriate geofencing and resale controls), or Regulation A or Regulation Crowdfunding for smaller retail raises. Consider whether state securities filings are required.
3. Money transmission, AML and sanctions. Assess money transmission and AML obligations, particularly if the issuer accepts fiat or custodies purchaser funds. State regimes such as New York’s BitLicense, which expressly covers issuing a virtual currency, must also be considered. Screen purchasers against OFAC lists and block sanctioned jurisdictions.
4. Antifraud overlay. Remember that even tokens that are not securities remain subject to CFTC antifraud and anti-manipulation authority as commodities, and to FTC and state consumer protection law in marketing.
5. Tax. Address the tax treatment of the sale and of any token-based compensation (see question 7).

The broader point is that U.S. law no longer treats the token sale as inherently suspect. It treats the issuer’s promises as the regulated object. Projects that make specific, verifiable commitments, disclose honestly how much control their developers retain, and build their tokenomics and lockups into enforceable smart contracts are now well positioned to raise capital in the U.S. markets, including from retail investors.

The Uniform Commercial Code (UCC) provides the primary legal framework for secured transactions involving personal property. UCC Article 9 governs the creation, perfection, priority, and enforcement of security interests and has been adopted by all 50 states, subject to some state-by-state variation.

Historically, applying these rules to crypto assets created uncertainty because the UCC was not designed with blockchain-based assets in mind. The 2022 amendments to the UCC sought to address this gap by introducing Article 12, together with related amendments to Article 9. Article 12 establishes a framework for certain digital assets, referred to as controllable electronic records (“CERs”), which can include crypto assets.

As of October 2026, 35 jurisdictions have adopted Article 12 and the 2022 UCC amendments. New York’s adoption is particularly significant because New York law is widely used as the governing law for sophisticated financing transactions and lending agreements involving major U.S. and international financial institutions. Its adoption of Article 12 therefore provides greater legal certainty for digital asset transactions structured under New York law.

A central concept under Article 12 is “control.” In broad terms, control looks at whether a person has the ability to obtain the benefits of a digital asset and transfer or prevent others from exercising control over it. For crypto assets, this can depend on how the asset is held, including through private keys, wallets, custodians, or other technological arrangements.

Control is particularly important when crypto assets are used as collateral because it can affect the perfection and priority of a lender’s security interest. A lender therefore needs to consider not only whether the borrower owns or has rights in the crypto asset, but also how the lender’s security interest will be established and protected against competing claims.

Digital assets can also present unique ownership and evidentiary issues. Blockchain records, wallet addresses, private keys, transaction histories, custodial records, and smart contracts may all be relevant in establishing rights in an asset. Moreover, where a token or NFT represents rights in another underlying asset (such as intellectual property or real estate) obtaining rights in the token itself does not necessarily give the lender rights in the underlying asset.

Finally, the regulatory classification of the crypto asset matters. Depending on its characteristics and how it is offered or used, a digital asset may be treated as a commodity, security, stablecoin, collectible, or another type of digital asset. That classification can trigger additional federal securities, commodities, or other regulatory requirements that affect the ability and nature of any transfer.

Taken together, while the legal framework for transferring and granting security interests over crypto assets has become considerably clearer, crypto assets cannot necessarily be treated like traditional collateral in all circumstances. The nature of the asset, how it is held, what rights it represents, the applicable jurisdiction, and its regulatory classification can all affect whether and how title can be transferred or a security interest can be perfected.

Smart contract legislation in the United States remains nascent. There is no federal regulation addressing this particular topic, and while several states have passed “smart contract legislation,” this legislation does not automatically turn a blockchain smart contract into a binding contract. Rather, these regulations generally state that a contract does not become invalid merely because it includes a smart contract term, and that such contracts are recognized as legally effective so long as they contain the requisite elements of an enforceable contract.

In total, twenty-eight states have addressed legislation regarding blockchain, smart contracts, and verifiable credentials.  These state smart contract regulations have an important predecessor: the Electronic Signatures in Global and National Commerce (“ESIGN”) Act and the Uniform Electronic Transactions Act (“UETA”). Together, UETA and the ESIGN Act solidified the legal landscape for electronic records and signatures in commerce in the 2000s, confirming that they carry the same legal weight as traditional paper documents and wet-ink signatures.

Courts have weighed in on various issues regarding the status of blockchains, but none of these laws or cases resolve the problems of interpretation that arise from contracts written in code. In a recent case, Van Loon v. Department of the Treasury, the Fifth Circuit concluded that Tornado Cash’s immutable smart contracts could not be treated as “property,” because no person or entity exercised the type of dominion traditionally associated with ownership. The court emphasized that no actor could exclude others from using the underlying contracts, and therefore the system lacked the essential attributes of something that can be possessed or controlled. While this case did not resolve the problems of interpretation that arise from contracts written in code (or what happens when an agreement is enforced by the terms and mechanisms set forth in the contract itself), it illustrates the novel issues that smart contracts raise.

Some practitioners have referred to smart contracts as “automatically executing terms and conditions.” However, most smart contracts today function merely as mechanisms for the performance of an underlying contract, rather than as the contract itself. Parties typically pair smart contracts with terms of service and other user agreements that define their rights and obligations in human-readable terms, allowing smart contracts to automate some aspect of performance.

It is only a matter of time before greater uniformity comes to smart contract law in the United States. Smart contracts represent the next evolution of contract law precisely because they do something traditional contracts cannot: they automate performance. That ability will inevitably raise new legal questions, some of which remain difficult to anticipate. Just as the law evolved to accommodate electronic signatures and digital agreements, it will evolve again to address smart contracts’ unique questions and challenges.

Business entities in the United States are created and governed by state law, not federal law, and Decentralized Autonomous Organizations (“DAOs”) are not, by default, a recognized type of legal entity. A DAO typically operates without a central manager; its members, usually token holders, vote on proposals that are recorded on a blockchain and executed through smart contracts. A DAO that is not organized under a state entity statute (see below) is not, however, free of legal form. Courts and regulators will apply default rules and may treat it as a general partnership or an unincorporated association, which can expose its members to unlimited, and potentially joint and several, liability for the DAO’s obligations. In CFTC v. Ooki DAO (N.D. Cal. 2023), the court entered a default judgment holding that Ooki DAO was an unincorporated association, and therefore a “person” that could be sued and held liable under the Commodity Exchange Act. Private plaintiffs have pursued a partnership theory of member liability. In Sarcuni v. bZx DAO (S.D. Cal. 2023) and Samuels v. Lido DAO (N.D. Cal. 2024), the courts found at the pleading stage that the DAOs were plausibly alleged to be general partnerships. In Lido, the court allowed claims to proceed against three venture capital investors that had actively participated in the DAO’s governance but dismissed a fourth investor whose involvement was alleged to be limited to holding tokens.

Several states have responded by creating new or adapted entity forms designed for decentralized, blockchain-based organizations. These statutes generally follow one of three models.

LLCs. The earliest statutes model the limited liability company. Vermont’s 2018 legislation permits the formation of a “blockchain-based limited liability company.” Wyoming’s 2021 DAO supplement to its LLC Act was the first statute to recognize DAOs specifically, allowing a DAO to organize as an LLC managed by its members or through smart contracts. Tennessee adopted a similar “decentralized organization” LLC statute in April 2022.

DAOs. Utah’s Decentralized Autonomous Organizations Act (effective January 1, 2024) created a distinct entity type, the limited liability decentralized autonomous organization (“LLD”), rather than a type of LLC. Members of an LLD generally are not personally liable for its obligations beyond their contributions. To qualify, a DAO must meet technical requirements, including providing evidence that its software has undergone quality assurance review.

Nonprofit Associations. Wyoming’s Decentralized Unincorporated Nonprofit Association Act (effective July 1, 2024) created the “DUNA,” a nonprofit association form for decentralized organizations with at least 100 members, whose governance may be conducted through smart contracts. A DUNA has legal entity status and provides members with limited liability similar to that of an LLC. In 2026, West Virginia (effective July 1, 2026) and Alabama (effective October 1, 2026) enacted their own DUNA statutes.

These forms provide limited liability and a recognized legal counterparty, but only for DAOs that elect to organize under them and meet their requirements. A DAO that does not do so remains exposed to the default partnership and association theories described above.

Enforcement involving blockchain and crypto assets has changed significantly since 2025. Federal agencies have largely stopped bringing cases built on the theory that crypto intermediaries were operating as unregistered securities or commodities businesses. They now focus on fraud, market manipulation, sanctions evasion and other illicit finance.

SEC. Between February and May 2025, the SEC dismissed its registration-based enforcement actions against Coinbase, Kraken, Consensys, Cumberland DRW and Binance, among others. In August 2025, the Ripple litigation ended when both parties dropped their appeals, leaving the 2024 final judgment in place. Also in February 2025, the SEC replaced its Crypto Assets and Cyber Unit with a Cyber and Emerging Technologies Unit focused on fraud rather than registration violations. The SEC continues to bring crypto-related fraud cases, including against Ponzi schemes and fake trading platforms, while addressing regulatory questions through guidance and rulemaking (see questions 2 and 5).

CFTC. The CFTC has likewise concentrated on fraud. In August 2026, for example, it charged Goliath Ventures Inc. and its CEO with an alleged $400 million fraud scheme, in parallel with an SEC action. The CFTC’s 2023 default judgment against Ooki DAO remains the leading precedent on DAO liability (see question 13).

DOJ. In April 2025, Deputy Attorney General Todd Blanche issued a memorandum titled “Ending Regulation by Prosecution.” It disbanded the National Cryptocurrency Enforcement Team and directed prosecutors to stop targeting exchanges, mixers and wallets for the acts of their users or for unwitting regulatory violations. Prosecutors are instead to focus on those who victimize digital asset investors or use digital assets to commit other crimes. Prosecutions of individuals continue. In November 2025, the founders of Samourai Wallet were sentenced to five and four years in prison after pleading guilty to conspiracy to operate an unlicensed money transmitting business. In December 2025, Terraform Labs co-founder Do Kwon was sentenced to 15 years for wire fraud and conspiracy to commit securities, commodities and wire fraud. The Tornado Cash prosecution of Roman Storm is discussed in question 6.

Treasury. In March 2025, OFAC removed Tornado Cash from the Specially Designated Nationals List following the Fifth Circuit’s decision in Van Loon v. Department of the Treasury, which held that Tornado Cash’s immutable smart contracts were not sanctionable property. Treasury continues to use sanctions against crypto-related actors involved in sanctions evasion and North Korean cyber theft. In October 2025, FinCEN issued a final rule under Section 311 of the USA PATRIOT Act cutting off Cambodia-based Huione Group from the U.S. financial system for laundering proceeds of crypto scams and hacks.

States. State regulators and attorneys general continue to bring licensing, anti-money laundering and consumer protection actions. In August 2025, the New York Department of Financial Services fined stablecoin issuer Paxos $26.5 million for anti-money laundering failures, including inadequate due diligence on its former partner Binance, and required it to invest a further $22 million in its compliance program. Crypto kiosks have become a particular focus. In December 2025, Maine entered a consent agreement requiring Bitcoin Depot to provide approximately $1.9 million in restitution to state residents.

Yes. Blockchain businesses remain subject to generally applicable U.S. laws even where there is no blockchain specific regulation.

Privacy and data protection laws can be relevant because blockchain records may be difficult or impossible to modify or delete. State laws such as the California Consumer Privacy Act provide rights to delete and correct personal information, which can create issues where personal data is recorded directly on an immutable blockchain.

Insolvency and property law are also important, particularly in determining the ownership and treatment of digital assets held by exchanges or custodians. The FTX bankruptcy highlighted these issues, including the importance of contractual ownership provisions, segregation of customer assets and the treatment of customer claims in insolvency.

Other generally applicable laws, including sanctions, AML, consumer protection, cybersecurity, tax and intellectual property laws, may also apply depending on the particular blockchain application.

One of the principal challenges for legal practitioners advising blockchain companies in the United States is that there is no single body of blockchain law. A blockchain-based product can implicate several regulatory regimes simultaneously, and the same crypto asset may be treated differently for securities, commodities, commercial and tax purposes. The regulatory landscape continues to evolve rapidly, with several important rules and frameworks still in the proposal stage.

In practice, a few habits help clients navigate this environment:

Start with a functional map. Before analyzing any particular regime, map what the product actually does: Who holds keys, who can upgrade or pause the code, how orders are routed, how value moves and who is paid. Most regulatory questions can then be answered by matching each function to the regime that covers it, rather than by debating how the product as a whole should be regulated.

Treat public statements as disclosure. Under current SEC guidance, much depends on what the issuer itself has promised. White papers, roadmaps, blog posts, social media and community forum posts should be reviewed with the same care as offering documents and kept consistent over time.

Settle structure and ownership before launch. Decide early which entity will hold the treasury, the intellectual property and the brand, and how decision rights pass to token holders, if at all. These questions are much harder to fix after a token is live and a community has formed.

Draft custody and user terms for the worst case. Terms of service, custody agreements and key management policies are often what decide outcomes in insolvency or disputes. They should be drafted as if they will inevitably be read by a court.

Plan for the states early. Federal relief rarely resolves state licensing, consumer protection or attorney general exposure. A state-by-state assessment, and a deliberate decision about where to operate or geofence, should be part of the launch plan rather than an afterthought.

Bring technical diligence into the legal review. Smart contract audits, administrative keys, upgradeability, oracle dependencies and bridge risk can determine both legal characterization and liability. Lawyers should review these with engineers and reflect them in disclosures, representations and indemnities.

Plan for policy change. The current enforcement posture largely reflects agency discretion rather than changes in statute, and statutes of limitations for many federal claims run for five years or more. Conduct that is unlikely to draw enforcement today may be judged under different priorities later, so clients should document their good-faith compliance analysis contemporaneously.