Yes, cryptocurrency is regulated in the US, but not by a single law or single agency. Instead, four federal regulators divide authority based on how a token behaves and what a business does with it, the IRS taxes every digital asset as property, and almost every state layers its own licensing rules on top. The result is a working framework that covers most activity, even though gaps and open questions remain.
Who Regulates Cryptocurrency at the Federal Level
Four agencies do most of the work:
- The Securities and Exchange Commission (SEC) regulates tokens that qualify as securities.
- The Commodity Futures Trading Commission (CFTC) regulates tokens treated as commodities, along with derivatives and certain leveraged trading.
- The Financial Crimes Enforcement Network (FinCEN), a Treasury bureau, enforces anti-money laundering rules on exchanges and other crypto businesses.
- The Internal Revenue Service (IRS) taxes digital assets as property.
The Office of the Comptroller of the Currency (OCC) also has a role now that federal stablecoin rules are in force, and the Consumer Financial Protection Bureau (CFPB) can act against unfair or deceptive practices in the space, though its enforcement activity has been significantly curtailed since early 2025.1Consumer Financial Protection Bureau. Policy Statement on Abusive Acts or Practices
When a Token Is Treated as a Security
The SEC considers a digital asset a security when it meets the definition of an “investment contract” under the Securities Act of 1933. The agency applies the Howey test, drawn from a 1946 Supreme Court decision, which asks whether there is (1) an investment of money, (2) in a common enterprise, (3) with a reasonable expectation of profits derived from the efforts of others.2U.S. Securities and Exchange Commission. Framework for Investment Contract Analysis of Digital Assets If all three elements are present, the token is a security and must be registered with the SEC or fit an exemption.
Tokens sold to fund a project’s development, with buyers relying on the team’s ongoing work to increase value, almost always meet that test. Selling them without registration exposes the issuer to injunctions and civil penalties, and platforms that list unregistered securities risk being forced to register as a national securities exchange or shut down.
A token can also change categories over time. Some start as securities but are treated more like commodities once the underlying network is sufficiently decentralized and investors no longer depend on a central team. Where a token sits depends on its governance, how it was distributed, and who drives its value.
When a Token Is Treated as a Commodity
The CFTC regulates certain digital assets as commodities under the Commodity Exchange Act. Bitcoin is the clearest example: it has no central issuer and no team whose managerial efforts drive its value, so it does not meet the Howey test. That classification gives the CFTC authority over fraud and manipulation in spot markets for those assets and over derivatives trading generally.
The CFTC’s authority matters most for platforms that offer leveraged or margin trading to retail customers. Under federal rules, a leveraged retail commodity transaction is treated essentially the same as a futures contract, which means the platform must register with the CFTC and follow the rules for designated contract markets. There is a narrow carve-out: if the customer takes full possession and control of the purchased cryptocurrency within 28 days, and the seller retains no interest in it, the transaction is not treated as a futures contract.3Federal Register. Retail Commodity Transactions Involving Certain Digital Assets Platforms that skip registration have faced enforcement.
Anti-Money Laundering Rules for Exchanges
FinCEN requires cryptocurrency exchanges and similar businesses to follow the same anti-money laundering rules that apply to traditional financial institutions. Under FinCEN guidance, any business that exchanges cryptocurrency for regular currency or transfers digital assets on behalf of others qualifies as a money services business (MSB).4Financial Crimes Enforcement Network. Advisory on Illicit Activity Involving Convertible Virtual Currency That classification pulls in several obligations:
- Register with FinCEN, regardless of any state licensing.5eCFR. 31 CFR 1022.380 – Registration of Money Services Businesses
- Run a written anti-money laundering program with a compliance officer, internal controls, and training.
- Verify customer identity (Know Your Customer), typically by collecting government ID and a residential address before allowing transactions.
- File a Suspicious Activity Report when a transaction of $2,000 or more looks suspicious.6Financial Crimes Enforcement Network. Suspicious Activity Reporting Requirements
The Travel Rule adds a further layer. When a customer sends $3,000 or more in cryptocurrency through an exchange, the sending institution has to pass identifying information about both the sender and the recipient, including names, account numbers, and addresses, to the receiving institution.7Financial Crimes Enforcement Network. FinCEN Advisory – Funds Travel Regulations: Questions and Answers
FinCEN also proposed a rule in 2020 that would require exchanges to collect and report information on transactions over $10,000 involving unhosted (self-custody) wallets and to keep records on transactions above $3,000 with those wallets.8U.S. Department of the Treasury. The Financial Crimes Enforcement Network Proposes Rule Aimed at Closing Anti-Money Laundering Regulatory Gaps for Certain Convertible Virtual Currency and Digital Asset Transactions As of 2026, it has not been finalized.
How Cryptocurrency Is Taxed
The IRS treats all digital assets, including cryptocurrency, stablecoins, and NFTs, as property.9Internal Revenue Service. Notice 2014-21 Every time you sell, trade, or otherwise dispose of a digital asset, you may owe capital gains tax on the difference between your cost basis and what the asset was worth when you disposed of it.
Holding period sets the rate. Gains on assets held one year or less are taxed at your ordinary income rate. Gains on assets held longer than one year are taxed at 0%, 15%, or 20%, depending on your taxable income. For 2026, single filers begin paying the 15% rate at $49,450 in taxable income, and the 20% rate applies above $545,500. Higher-income taxpayers may also owe an additional 3.8% net investment income tax, which can push the effective top rate to 23.8%.
Getting paid in crypto is also a taxable event. Mining rewards, staking rewards, and wages paid in cryptocurrency are ordinary income equal to the fair market value of the tokens at the time you receive them.10Internal Revenue Service. Frequently Asked Questions on Virtual Currency Transactions Employer-paid crypto wages are subject to federal income tax withholding, FICA, and FUTA, and get reported on a W-2. Crypto earned as an independent contractor is self-employment income and carries self-employment tax.
The Digital Asset Question on Form 1040
Every Form 1040 asks whether you received, sold, exchanged, or otherwise disposed of a digital asset (or any financial interest in one) during the tax year.11Internal Revenue Service. Determine How to Answer the Digital Asset Question You cannot leave it blank; you must check “Yes” or “No.”12Internal Revenue Service. 1040 (2025) Instructions Answering falsely can trigger audits, accuracy penalties, and in serious cases charges of tax evasion.
Form 1099-DA
Starting with the 2026 tax year, cryptocurrency brokers and exchanges must report transaction details to the IRS on a new form, Form 1099-DA.13Internal Revenue Service. Form 1099-DA – Digital Asset Proceeds From Broker Transactions (2026) Brokers report the gross proceeds from every sale, and for assets acquired on or after January 1, 2026, they also report cost basis if they can track it. Reporting basis for assets acquired earlier remains voluntary. This brings crypto reporting closer to how stocks and bonds are already handled.
The Wash Sale Gap
The wash sale rule that blocks stock investors from claiming a loss when they repurchase the same security within 30 days does not apply to cryptocurrency. Because digital assets are property rather than securities for this purpose, you can sell crypto at a loss and immediately buy it back while still claiming the loss. Congress has proposed extending the wash sale rule to digital assets, but no such change had been enacted as of 2026.
Stablecoin Rules Under the GENIUS Act
Stablecoins now have their own federal framework through the GENIUS Act, which sets requirements for entities that want to issue payment stablecoins and splits oversight among federal banking regulators.14U.S. Congress. S.1582 – GENIUS Act
Under implementing rules from the OCC, permitted stablecoin issuers must back every outstanding stablecoin on at least a one-to-one basis by total fair value, hold those reserves separately from their own assets, and limit reserves to conservative holdings such as U.S. currency, Federal Reserve balances, demand deposits at FDIC-insured banks, short-term Treasuries with 93 days or less to maturity, overnight repos backed by short-term Treasuries, and government money market funds invested only in those assets.15OCC.gov. Implementing the GENIUS Act for the Issuance of Stablecoins by Entities Subject to the Jurisdiction of the OCC Issuers must publish a monthly reserve composition report examined by an independent public accounting firm, with the CEO and CFO certifying its accuracy. The National Credit Union Administration is developing parallel rules for credit union-affiliated issuers.16National Credit Union Administration. NCUA Proposes Rule for Permitted Payment Stablecoin Issuer Applications
State Licensing Requirements
Federal rules do not displace the states. Most states require cryptocurrency businesses that hold or transfer funds for residents to obtain a money transmitter license, and because each state sets its own requirements, a nationwide exchange typically needs dozens of licenses along with surety bonds, background checks, and ongoing compliance costs.
New York’s BitLicense
New York runs one of the strictest state regimes through the BitLicense, codified at 23 NYCRR Part 200. Companies engaged in virtual currency business activity involving New York residents must obtain and maintain a license, with rules on capital reserves, cybersecurity, anti-money laundering compliance, and customer asset custody.17Legal Information Institute. New York Regulations Title 23, Chapter I, Part 200 – Virtual Currencies Operating without authorization can bring cease-and-desist orders and fines.
Wyoming’s Special Purpose Depository Institutions
Wyoming took a different route by creating the Special Purpose Depository Institution (SPDI) charter, which lets companies offer banking-like services built around digital assets. SPDIs must maintain reserves equal to at least 100% of their customer deposits of traditional currency at all times and are prohibited from lending those deposits out.18Division of Banking. Special Purpose Depository Institutions19Wyoming Legislature. 2019 HB0074 – Special Purpose Depository Institutions
What This Means for You
If you buy, sell, or hold cryptocurrency in the U.S., three things follow from the framework above. First, the exchange you use is almost certainly a regulated business: it should be registered with FinCEN, licensed in states where it operates, and asking for identity documents before you trade. If it is not, that itself is a warning sign. Second, every disposal is a potential taxable event, and beginning with the 2026 tax year your exchange will be sending the IRS a 1099-DA that reports what you did. Answering the Form 1040 digital asset question honestly matters. Third, the token itself may be a security, a commodity, or a payment stablecoin, and the answer changes which rules apply to the company you are dealing with, not usually to you directly. Broader market structure legislation that would draw cleaner lines between the SEC and CFTC was still moving through Congress as of mid-2026 and had not been signed into law.