Learn · Crypto, from first principles
Crypto regulation
After fifteen years of uncertainty, the outlines of a framework exist in several major jurisdictions. The central question — what is a security — is still not settled in the United States.
For most of this field's existence the rules were made by enforcement rather than legislation, which left participants guessing. That has changed substantially, unevenly, and not completely.
The question underneath everything
Is a given token a security, a commodity, or something else? The answer determines which regulator has authority, what disclosure is required, where it can be listed and who may sell it.
Fact
The US test asks whether there is an investment of money in a common enterprise with an expectation of profit from the efforts of others
This long-standing standard predates the field by decades. Applying it to tokens is difficult because the answer can change over time: a token sold to fund a project by an identifiable team may satisfy the test at issuance, and a token on a network that has become genuinely decentralised may not. Courts have reached differing conclusions on similar facts, which is why the uncertainty persisted.
This long-standing standard predates the field by decades. Applying it to tokens is difficult because the answer can change over time: a token sold to fund a project by an identifiable team may satisfy the test at issuance, and a token on a network that has become genuinely decentralised may not. Courts have reached differing conclusions on similar facts, which is why the uncertainty persisted.
Where legislation has landed
Fact
The GENIUS Act, establishing a federal framework for payment stablecoins, was signed into law on 18 July 2025
It requires issuers to be licensed, to back tokens one-to-one with approved reserve assets, and it prohibits paying interest to holders. It passed the Senate 68–30 in June 2025 and the House 308–122 in July. See stablecoins.
It requires issuers to be licensed, to back tokens one-to-one with approved reserve assets, and it prohibits paying interest to holders. It passed the Senate 68–30 in June 2025 and the House 308–122 in July. See stablecoins.
Fact
Broader market-structure legislation has not become law
The CLARITY Act, which would give the CFTC authority over digital commodity spot markets while leaving the SEC authority over investment contracts, passed the House of Representatives 294–134 on 17 July 2025. On 15 September 2026 a Senate cloture vote on the bill failed 49–50, short of the 60 votes required to proceed. The securities-versus-commodity allocation therefore remains unresolved by statute.
The CLARITY Act, which would give the CFTC authority over digital commodity spot markets while leaving the SEC authority over investment contracts, passed the House of Representatives 294–134 on 17 July 2025. On 15 September 2026 a Senate cloture vote on the bill failed 49–50, short of the 60 votes required to proceed. The securities-versus-commodity allocation therefore remains unresolved by statute.
Other jurisdictions
- European Union. MiCA applies a comprehensive regime across member states, fully applicable from 30 December 2024, covering issuers, service providers and reserve requirements for asset-referenced tokens.
- United Kingdom, Singapore, Japan, UAE and others have each built authorisation regimes for exchanges and custodians, with differing treatment of stablecoins and differing degrees of retail restriction.
- Several jurisdictions restrict or prohibit retail access to particular products, especially high-leverage derivatives.
The themes that are consistent everywhere
- Custody and client-asset segregation. The direct response to 2022. Nearly every framework requires customer assets to be held separately and verifiably.
- Stablecoin reserves. Treated as a payments activity requiring backing, liquidity and disclosure.
- Anti-money-laundering obligations on intermediaries, including identity verification and transfer information requirements.
- Consumer protection on marketing, leverage limits and risk warnings.
Interpretation
The direction of travel is clear even where the details are not
Activities that look like banking, exchange or securities issuance are being regulated as such, regardless of the technology. Genuinely decentralised protocols with no operator sit awkwardly in every framework, and how they are treated is the live question. Anyone expecting the field to remain outside financial regulation has not been reading the legislation.
Activities that look like banking, exchange or securities issuance are being regulated as such, regardless of the technology. Genuinely decentralised protocols with no operator sit awkwardly in every framework, and how they are treated is the live question. Anyone expecting the field to remain outside financial regulation has not been reading the legislation.
Regulation is jurisdiction-specific and changes. Nothing here is legal or tax advice, and the treatment of crypto for tax purposes in particular varies enormously between countries — check your own rules or ask someone qualified in them.
Education, not advice. These lessons explain how things work. They do not tell you what
to buy, and Wealth Signal does not publish recommendations. Full disclaimer.