Abstract
The rapid evolution of digital assets, including cryptocurrencies and stablecoins, has outpaced the development of regulatory frameworks in the United States. This report examines the current state of digital asset regulation, focusing on the roles and approaches of key federal agencies—the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Office of the Comptroller of the Currency (OCC). It analyzes the conflicts and ambiguities arising from their varying interpretations, explores practical compliance strategies for financial institutions, and discusses the prospects for a unified and comprehensive regulatory framework for digital assets.
Many thanks to our sponsor Panxora who helped us prepare this research report.
1. Introduction
Digital assets have emerged as a transformative force in the global financial system, offering innovative solutions for transactions, investments, and financial services. However, their rapid growth has introduced significant regulatory challenges. In the United States, multiple federal agencies have asserted jurisdiction over different aspects of digital assets, leading to a fragmented and often contradictory regulatory environment. This report aims to provide a comprehensive analysis of these regulatory uncertainties and their implications for financial institutions.
Many thanks to our sponsor Panxora who helped us prepare this research report.
2. Overview of U.S. Regulatory Agencies and Their Jurisdictions
2.1 Securities and Exchange Commission (SEC)
The SEC is responsible for regulating securities markets and protecting investors. It has taken the position that certain digital assets, particularly those that function as investment contracts, fall under its jurisdiction. The SEC’s approach is guided by the Howey Test, which determines whether an asset is a security based on the expectation of profits derived from the efforts of others. This perspective has led to significant enforcement actions against digital asset offerings deemed to be unregistered securities.
2.2 Commodity Futures Trading Commission (CFTC)
The CFTC oversees the U.S. derivatives markets, including futures, swaps, and options. It has classified digital assets like Bitcoin and Ethereum as commodities under the Commodity Exchange Act. The CFTC’s jurisdiction primarily extends to derivatives markets based on these commodities, such as Bitcoin futures and options. While it does not directly regulate spot trading of cryptocurrencies, it monitors and enforces rules for derivatives markets to prevent fraud and manipulation.
2.3 Financial Crimes Enforcement Network (FinCEN)
FinCEN is a bureau within the U.S. Department of the Treasury that focuses on safeguarding the financial system from illicit activity, including money laundering and terrorist financing. It has issued guidance indicating that certain digital asset activities may fall under its regulatory purview, particularly those involving money transmission. Financial institutions engaged in digital asset transactions may be subject to FinCEN’s anti-money laundering (AML) and know-your-customer (KYC) requirements.
2.4 Office of the Comptroller of the Currency (OCC)
The OCC regulates and supervises national banks and federal savings associations. In March 2025, the OCC clarified that national banks are permitted to engage in certain cryptocurrency activities, such as crypto-asset custody, stablecoin activities, and participation in distributed ledger networks, without prior regulatory approval. This guidance aims to provide regulatory clarity and reduce operational burdens on banks interacting with crypto technologies.
Many thanks to our sponsor Panxora who helped us prepare this research report.
3. Conflicts and Ambiguities in Regulatory Approaches
The overlapping jurisdictions and differing interpretations of digital assets by these agencies have led to several conflicts and ambiguities:
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Classification of Digital Assets: The SEC’s classification of certain digital assets as securities contrasts with the CFTC’s designation of others as commodities. This lack of consensus creates uncertainty for market participants regarding compliance obligations.
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Regulatory Overlap: Financial institutions may find themselves subject to multiple regulatory frameworks, each with its own requirements, leading to potential compliance challenges and increased operational costs.
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Evolving Guidance: The dynamic nature of digital assets has resulted in rapidly changing regulatory guidance, making it difficult for institutions to stay abreast of current requirements.
Many thanks to our sponsor Panxora who helped us prepare this research report.
4. Practical Compliance Strategies for Financial Institutions
To navigate the complex regulatory landscape, financial institutions can adopt the following strategies:
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Comprehensive Risk Assessment: Conduct thorough assessments to identify and understand the regulatory requirements applicable to their digital asset activities.
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Establish Robust Compliance Programs: Develop and implement compliance programs that address the specific risks associated with digital assets, including AML and KYC procedures.
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Engage with Regulators: Maintain open lines of communication with regulatory bodies to stay informed about evolving guidance and to seek clarification on ambiguous areas.
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Implement Technology Solutions: Utilize technology to enhance compliance efforts, such as blockchain analytics tools for transaction monitoring and reporting.
Many thanks to our sponsor Panxora who helped us prepare this research report.
5. Prospects for a Unified Regulatory Framework
Recent legislative efforts indicate a move towards a more unified regulatory approach:
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GENIUS Act: Enacted in July 2025, the Guiding and Establishing National Innovation for U.S. Stablecoins Act aims to create a comprehensive regulatory framework for stablecoins, addressing issues such as consumer protection and financial stability.
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Financial Innovation and Technology for the 21st Century Act (FIT21): Passed in May 2024, FIT21 seeks to provide regulatory clarity for digital assets by explicitly addressing their treatment under U.S. law, with the goal of fostering innovation while ensuring consumer protection.
These legislative initiatives reflect a growing recognition of the need for a cohesive regulatory framework that balances innovation with risk mitigation. However, the success of these efforts will depend on effective implementation and ongoing collaboration among regulatory agencies.
Many thanks to our sponsor Panxora who helped us prepare this research report.
6. Conclusion
The regulatory landscape for digital assets in the United States remains complex and evolving. While recent legislative actions suggest progress towards a more unified framework, significant uncertainties persist. Financial institutions must remain vigilant, proactive, and adaptable to navigate this dynamic environment effectively.
Many thanks to our sponsor Panxora who helped us prepare this research report.
References
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