US cryptocurrency regulation: who regulates what
US crypto regulation is split by federal activity, not one agency. The IRS taxes crypto as property, and FinCEN requires exchange registration.
Vahe HakobyanEditor-in-chief
Updated Oct 5, 20263 min readFact-checked
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- The SEC uses the Howey test for tokens that may be securities.
- The CFTC calls Bitcoin and Ether commodities and polices derivatives.
- FinCEN has required some crypto businesses to register since 2013.
- New York's BitLicense covers crypto businesses serving state residents.
The split among agencies is the core of who makes the rules for crypto in the US. Each agency looks at a different activity, and the same token can fall under more than one set of rules. A sale can be a securities question for the SEC, a commodities question for the CFTC, and a taxable event for the IRS at the same time.
How does the IRS tax crypto?
The IRS treats cryptocurrency as property, not as a currency. You report a taxable event when you sell, swap, or spend crypto. You also report crypto you receive as income, such as mining or staking rewards. Buying and holding alone does not create a tax bill.
Which agencies regulate crypto?
Three federal agencies besides the IRS take the lead on crypto oversight. The SEC looks at tokens that may be securities. The CFTC looks at commodities and derivatives. FinCEN enforces anti-money-laundering rules and exchange registration.
Do state crypto rules apply?
Yes, states add their own crypto rules on top of federal oversight. The rules differ by state, and a business usually needs a license in each state where it has customers.
- New York's BitLicense covers crypto businesses serving New York residents.
- Many states require money transmitter licenses for crypto exchanges.
- A license in one state does not cover the whole country.
Frequently asked questions
No. A purchase and holding period by itself does not trigger a tax bill; tax applies when you sell, swap, spend, or receive crypto as income.
The SEC has not treated Bitcoin and Ether as securities. The CFTC calls both commodities. The SEC still regulates securities offerings and platforms that trade crypto assets it considers securities.
Foreign exchanges that serve US customers usually must register with FinCEN as money services businesses and follow anti-money-laundering rules. The SEC and CFTC can also apply their rules if the exchange offers securities or derivatives to US persons.
Crypto income is reported on your income tax return, following the IRS digital asset instructions. The exact form depends on whether the income comes from a business or from another source.
