Introduction: a Dramatic Shift in Approach
The United States has long served as an epicentre for technological innovation. However, strong legal and regulatory headwinds over the preceding years have created challenges for digital asset companies wishing to do business in the United States.
By maintaining an adversarial posture towards the digital assets industry, the United States has put at risk its opportunity to lead in the development of innumerable businesses utilising blockchain technology. It has also put the country out of step with the major economic markets that have already enacted laws and regulations designed to appropriately balance the potential of digital asset technologies with market and consumer protections.
In the face of these challenges, the digital assets industry has called upon Congress and key financial regulators to craft clear rules. While these calls have been largely unheeded for years, there is now widespread (and increasingly bipartisan) recognition in the United States that the prior legal and regulatory approach was not working. In 2025, more than ever before, there is a strong sense of optimism that the United States will create an environment ripe for businesses integrating digital assets to thrive.
The shift in approach has been rapid. Congress is presently considering several key pieces of legislation – including legislation governing stablecoins and overall market structure – that are regarded by many as significant improvements to the status quo. The Securities and Exchange Commission (SEC) has paused "theory" cases against digital assets businesses and released several statements seeking to clarify that certain types of digital assets and transactions in those assets do not implicate the federal securities laws. At the same time, the executive branch has expressed an unprecedented level of support for the industry, engaging with business leaders and issuing pro-digital asset executive orders.
The collective effect of these efforts has been to signal that the United States is actively seeking to become a centre for the development of digital asset businesses and digital asset-related activity. Observers believe that, in the coming months, many businesses – both digital native and traditional – will begin to unlock the potential energy in this jurisdiction that remained dormant during the prolonged period of regulatory scrutiny and uncertainty.
A New Securities Regulatory Environment
The digital assets industry has consistently battled with various US governmental agencies over the past several years, but its chief antagonist has been the SEC. The general approach of the SEC has been to rebuff the sector's calls for regulatory clarity, instead testing novel legal theories through the courts. This "regulation by enforcement" approach has drawn sharp criticism by senior SEC personnel (most notably Commissioner Hester Peirce) and – at times – by the judiciary.
The new administration has prioritised changing this approach, pausing or dismissing existing "theory" cases before the courts, releasing clarifying statements and providing itself with time (in collaboration with industry participants) to develop clear, well-considered regulation.
On 21 January 2025, the day after President Trump's inauguration, SEC Acting Chairman Mark T Uyeda announced the launch of a Crypto Task Force, led by Commissioner Peirce, dedicated to developing a comprehensive regulatory framework for digital assets. Commissioner Uyeda stated that "[t]he Task Force's focus will be to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously". His statement also acknowledged that the SEC's previous approach to relying "primarily on enforcement actions to regulate crypto retroactively and reactively" resulted in "confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud". Since its formation, the Task Force has held roundtables as part of the SEC's "Spring Sprint Toward Crypto Clarity" initiative, focused on defining the status of various digital assets and digital asset industry participants under the securities laws of the United States, and has released numerous clarifying staff statements.
On 21 February 2025, Commissioner Peirce issued a statement titled "There Must Be Some Way Out of Here", inviting public input on how the SEC should approach the digital assets industry and posing 48 questions addressing issues of consequence to the industry, including registration, trading, public offerings, custody and digital asset lending.
As of the time of this writing, the staff has issued guidance on its treatment of meme coins and stablecoins, as well as the application of certain disclosure requirements under the federal securities laws for registered offerings of securities in the digital asset markets. Specifically, the SEC clarified that transactions in meme coins do not involve the offer and sale of securities under the federal securities laws, noting that the value of meme coins is derived from speculative trading and the collective sentiment of the market, like a collectible.
Similarly, the staff stated that stablecoins designed to maintain a stable value relative to the US dollar, on a one-for-one basis, that can be redeemed for US dollars on a one-for-one basis, and that are backed by assets held in a reserve that are considered low-risk and readily liquid with a US dollar value that meets or exceeds the redemption value of the stablecoins in circulation, do not involve the offer and sale of securities. The SEC's statement explicitly carved out "yield-bearing stablecoins", noting that the SEC is not expressing a view on those products at this time.
The staff also issued a statement regarding disclosure requirements of companies "whose operations relate to networks, applications or crypto-assets" or that offer crypto-assets "as part of or subject to an investment contract". The statement provided guidance about specific disclosure items, including the description of business, risk factors, description of securities, and information about management, as well as exhibit requirements.
The Crypto Task Force has suggested that it intends to release additional clarifying statements, including statements regarding non-fungible tokens (NFTs).
Concurrent with a proactive approach in issuing guidance and ongoing outreach to industry participants for input, the SEC has shifted its position in various pending civil enforcement actions pursued under the previous leadership. Since the beginning of 2025, the SEC has announced the dismissal of several enforcement actions and has closed many of its probes of digital asset businesses. With this pause in enforcement activity, the SEC has provided itself – and Congress – with time to work on more comprehensive digital asset-related legal and regulatory issues.
Incorporation of Digital Assets Into the Traditional Financial Sector
After a period during which traditional financial institutions have effectively been prohibited from engaging in most digital asset activities, recent regulatory developments are opening the door for traditional financial institutions to participate in the digital assets space in a meaningful way.
On 7 March 2025, the Office of the Comptroller of the Currency (OCC), which regulates some of the largest banks in the United States, published Interpretive Letter 1183, which rescinded OCC Interpretive Letter 1179 (IL 1179) and reaffirmed that national banks are authorised to engage in certain "crypto-asset activities".
In 2020 and 2021, the OCC issued three Interpretive Letters (1170, 1172 and 1174), which clarified that national banks were permitted to engage in:
- safekeeping and custody of digital assets;
- holding deposits as reserves for certain stablecoins; and
- operating nodes on a blockchain ledger and engaging in certain stablecoin activities to facilitate payments.
However, in November 2021, under new leadership the OCC issued IL 1179, which required national banks to notify the OCC and obtain a written non-objection prior to engaging in such activities. The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve issued similar guidance essentially requiring banks to obtain supervisory preapproval to engage in digital asset-related activities.
Since IL 1179 has been rescinded, national banks are again permitted to engage in these digital asset-related activities without obtaining prior regulatory approval so long as the activities are conducted in a safe, sound and fair manner and in compliance with applicable law. The FDIC followed suit and issued new guidance (FIL-7-2025) on 28 March 2025, which permits FDIC-supervised banks to engage in digital asset-related activities provided they manage the associated risks. The Federal Reserve is expected to issue similar guidance soon.
On 23 January 2025, the SEC issued Staff Accounting Bulletin (SAB) 122, rescinding SAB 121. Issued in March 2022, SAB 121 required SEC reporting companies that custody digital assets to record these holdings as liabilities on their balance sheets. This accounting treatment was inconsistent with how securities are treated, and dramatically increased the costs to custodians who wished to provide custody services to customers. For these reasons, SAB 121 was controversial when issued and was subsequently challenged by industry organisations, the Government Accountability Office (GAO) and Congress. Notably, Congress passed on a bipartisan basis a resolution disapproving of SAB 121, though it was vetoed by President Biden.
The issuance of SAB 122, on the same day as President Trump's executive order outlining the administration's goals to support the growth and use of digital assets, was one of the first acts by the SEC under the new administration. SAB 122 instructs firms that wish to custody digital assets to use Financial Accounting Standards Board rules or International Accounting Standard requirements when accounting for digital assets they hold as custodian. The repeal of SAB 121, combined with the recent OCC and FDIC guidance, will likely lead to more traditional financial institutions offering digital asset custody services.
Perhaps one of the most important recent developments in the digital assets space was the SEC's approval of the listing and trading of spot bitcoin exchange-traded funds (ETFs) in January 2024. The SEC's approval of spot Ethereum ETFs followed in July 2024. Digital asset ETFs are investment vehicles that are listed on a national securities exchange, can be bought and sold in the same manner as traditional securities, and provide investors with exposure to the underlying digital asset via traditional brokerage accounts. With the approval of these ETFs, investors and asset managers have a familiar means of making an investment in bitcoin and Ethereum.
The issuers of the ETFs include some of the world's largest asset managers. Several other traditional financial services firms act as market-makers or custodians of the underlying digital assets. In many ways, the involvement of traditional financial services firms in the digital assets ETF ecosystem represents a maturing market for digital assets. The SEC has acknowledged that applications have been filed for XRP, Solana and Litecoin ETFs, and it is expected that the SEC will continue to consider and approve more ETF applications.
With these regulatory developments, and a new administration that supports digital asset industry growth, traditional financial services firms are beginning to participate or to enhance their participation in the digital asset sector. Many of the largest banks have task forces or groups responsible for evaluating ways in which digital assets can be integrated into product or service offerings. Until recently, financial institutions have had to largely sit on the sidelines due to regulatory restrictions while less-regulated and more-nimble market participants captured market share. Banks and other financial institutions can now enter the space, albeit in a safe and responsible manner. It is expected that financial services firms will now offer products and services including digital asset custody, bitcoin and ether ETFs, loans backed by digital assets, blockchain-enabled payments, and much more.
Additional Executive Branch Activity
The new administration has signalled an unprecedented level of support for digital assets and businesses engaged with digital assets through the issuance of several executive orders and other executive acts, including:
- hosting a "Digital Asset Summit" at the White House on 7 March 2025, which was attended by the leadership of many global digital asset-related businesses;
- the appointment of chairpersons of important executive agencies and banking regulators who have publicly stated their support for liberalising or clarifying those agencies' policies towards and regulation of digital assets;
- the issuance of multiple executive orders related to digital assets;
- the announcement of a "Strategic Bitcoin Reserve" to be held by the federal government, to be capitalised with bitcoin owned by the Department of Treasury that was forfeited as part of criminal or civil asset forfeiture proceedings;
- the direction that the Secretaries of Treasury and Commerce develop budget-neutral strategies for acquiring additional bitcoin;
- the announcement of a US Digital Asset Stockpile, consisting of digital assets other than bitcoin owned by the Department of Treasury that were forfeited in criminal or civil asset forfeiture proceedings;
- the creation of the President's Working Group on Digital Asset Markets comprised of significant administrative agency heads; and
- the imposition of short timelines on Congress to introduce legislation to regulate stablecoins and to introduce market structure for digital assets.
The Rapid Rise in Digital Assets-Related Legislative Activity
Undoubtedly one of the most significant developments in the digital assets landscape over the preceding months has been Congress's increased and sustained focus on enacting digital asset-related legislation. This development has been well received by the industry sector.
While the SEC's cessation of most digital asset-related enforcement activity has been significant, in many ways federal legislation has been rightly perceived as more critical than changes in agency-level action. The central legal and regulatory issues impacting the sector implicate multiple regulators and government agencies. Agency-level action is inadequate to holistically address uncertainty and is less permanent than federal legislation, which cannot be altered as easily following a change in administration.
Congress's focus on digital assets appears to have been driven by a variety of interrelated factors, including:
- the more widespread institutional embracing of digital assets in the United States;
- the increased integration of digital assets in the traditional financial services industry;
- the strong re-emergence of the digital assets ecosystem following negative events, such as the collapse of FTX;
- the increase of lobbying and educational efforts by leading digital assets businesses and industry groups; and
- an influx of political contributions by industry participants.
As a consequence, a stronger consensus has emerged that digital assets are a lasting and growing component of the financial services ecosystem (and many other industry sectors). Under these circumstances, Congress appears to have felt a strong impetus to act – and to act with some urgency given the significant uncertainty in the existing US regulatory environment and the opportunity costs associated with the perception that the United States' regulatory approach is more fraught than that of other jurisdictions.
Thus far, Congress's priority has been to address the regulation of stablecoins. This choice appears to be guided by several factors. Stablecoins represent a significant but discrete component of the vast digital asset ecosystem, removing many of the complexities associated with comprehensively addressing the innumerable types of digital assets with different properties and characteristics that may call for different regulatory treatment. Additionally, fully reserved, non-yield-bearing stablecoins – perhaps more obviously than any other type of financial-related digital asset – do not implicate the concerns traditionally addressed by the SEC.
In this regard, the main thrust of the current proposed stablecoin legislation would largely divest the SEC of jurisdiction over "payment stablecoins" and place that jurisdiction in the hands of the prudential banking regulators, creating a path to licensure at the federal or state level. Legislators and regulators appear to have recognised that the key issue to be addressed is not whether "investors" are protected – which makes little sense in the context of an instrument that is designed to maintain a stable value and therefore would not typically be considered an "investment" – but rather whether the institutions responsible for minting and redeeming the stablecoins are "safe and sound" by, for example, maintaining adequate capital reserves in highly liquid assets. These concerns are the province of banking regulators.
There has been other proposed legislation regarding discrete digital asset issues that have garnered Congressional attention. In April 2025, the President signed into law a bill to repeal the IRS Digital Assets Sale and Exchanges Rule, known as the "DeFi Broker Rule". The DeFi Broker Rule expanded the definition of "broker" to include non-custodial entities (such as DeFi wallet providers), requiring them to report gross proceeds from digital asset sales and collect taxpayer data. This rule was considered by many in the industry sector to be an attack on decentralised protocols. Notably, the repeal received bipartisan support in both the House of Representatives and the Senate. Over the past months, however, there has been a noticeable trend of increased bipartisan support to adequately address digital assets, including by members of congressional leadership.
While piecemeal legislation has been easier to move through Congress, many members of Congress appear to have recognised that more holistic market structure legislation is necessary. Perhaps the most prominent example of market structure legislation is the Financial Innovation of Technology for the 21st Century Act (FIT21), initially introduced in the House of Representatives in 2023. Broadly, the bill is aimed at dividing regulatory responsibility for digital assets between the SEC and the Commodity Futures Trading Commission. In May 2024, FIT21 (in a bipartisan vote) passed the House, which marked a significant milestone for the digital assets industry.
Although FIT21 was generally well received by the digital assets sector, the politics of middle and late 2024 (eg, upcoming elections, the Biden administration's disapproval) impeded the bill from receiving a vote at the Senate. Following the change of administration in 2025, FIT21 has been reanimated with renewed optimism of passage. Some components of the bill – including a focus on "decentralisation" – have not aged perfectly, but at the time of this writing, there appears to be considerable inertia for FIT21 to at least serve as a starting point for market structure legislation. Other pieces of legislation – such as the Securities Clarity Act, which would clarify that digital assets are not inherently securities under US law – are under congressional consideration and may be included in comprehensive market structure legislation that ultimately is put to a vote before both chambers of Congress.
As the legislative and regulatory trajectory at the federal level is pointing towards a significantly more permissive approach to digital assets, many state legislatures have enacted (California) or are considering (Illinois) more comprehensive digital asset legislation of their own, following New York's "BitLicense". As we have seen with respect to New York, this legislation has the potential to create specific areas of the United States where virtual currency businesses are required to obtain a licence (a famously difficult exercise in New York) or fence out operational activity and customers.
At the time of this writing, major federal digital asset-related legislation has not been signed into law. However, the direction of the executive branch, the renewed interest of lawmakers, and a more-bipartisan trajectory makes the passage of such legislation more likely than ever. By next year, the legal and regulatory landscape for digital assets is expected to look very different than it looks today.
The Entry (and Return) of Digital Asset Businesses to the United States
Reduced regulatory enforcement risks, a newly liberalised banking environment, and strong narrative support and participation from the executive branch have combined to encourage digital asset companies previously wary of the United States to re-engage with the US market. Businesses that had left the United States because of these risks are now returning to provide services and products to US consumers and institutional investors. This change in policy and enforcement approach reverts the United States back to its historical pro-technology and pro-innovation position, which has resulted in the United States reaping significant benefits from the development of other impactful technologies such as the internet. While some businesses may be wary of a subsequent reversion to the prior policy approach by a future administration, congressional efforts should ensure that the current policy approaches are more durable and thus that the legal environment will remain more stable and predictable.
This reduced regulatory risk has impacted various digital asset-related businesses in different ways. While the withdrawal of most enforcement actions brought against digital asset issuers and exchanges under the federal securities laws has encouraged exchanges to provide services to users in the United States, the still-existing lack of clarity as to the regulatory classification of digital assets and the lack of a clear path for issuing digital assets to US purchasers continue to confuse the issue of what assets may be sold in the United States. Likewise, while the liberalisation of banking laws should encourage digital asset-related businesses to operate domestically, the lack of clarity as to certain guidance issued by FinCEN regarding liability for deploying software remains an impediment for certain businesses. Without further clarity as to liability for launching protocols outside the United States, transactions such as deploying DeFi protocols and DAOs and distributing tokens may continue to be conducted primarily offshore. Similarly, pending actions, including criminal enforcement actions, brought against creators of privacy software remain unresolved, which increases the risks of operating privacy-enabled businesses in the United States.
Conclusion
The United States' rapid shift in regulatory approach to digital assets has given the industry sector a justified sense of optimism. However, at the time of this writing, much of the key legislative and regulatory activity has yet to be accomplished. The authors expect that 2025 will be a critical year, and the industry remains hopeful that Congress and the various governmental and regulatory actors will create an environment that allows this powerful technology to realise its full potential in the United States.
Originally published by Chambers and Partners.
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