The United States has established a comprehensive regulatory framework for cryptocurrency and blockchain technology. The GENIUS Act passed in 2025 created a federal framework for stablecoin issuers. The SEC established a Crypto Task Force to provide regulatory clarity, while the CFTC began allowing spot cryptocurrency products trading. Multiple agencies including the SEC, CFTC, FinCEN, and IRS oversee different aspects of crypto activities. Banks are increasingly permitted to engage in crypto custody, trading, and stablecoin issuance. The regulatory environment emphasizes consumer protection, AML/CFT compliance, and securities law enforcement while fostering innovation.

Regulatory Framework: Multi-agency oversight with SEC (securities), CFTC (commodities), FinCEN (AML), IRS (taxation). Stablecoins: GENIUS Act provides federal licensing framework. Exchanges: Must register as MSBs and comply with state-level licensing. Taxation: Capital gains tax applies; reporting requirements via Form 8949. Securities: Crypto assets may be classified as securities under Howey Test. Banking: FDIC, OCC, and Federal Reserve allowing increased bank participation. Travel Rule: Implemented for transactions over $3,000. Key Developments 2025: Project Crypto initiative, increased regulatory clarity, institutional adoption accelerating.

Regulatory Framework

The United States operates under a complex multi-layered regulatory framework for cryptocurrency businesses. Federal agencies including FinCEN, SEC, CFTC, OCC, and state regulators all have jurisdiction over different aspects of crypto activities. There is no single "crypto license" at the federal level; instead, businesses must obtain multiple licenses and registrations depending on their activities and the states in which they operate.

Federal Requirements

FinCEN Money Services Business (MSB) Registration

Required for: Cryptocurrency exchanges, wallet providers, payment processors, and any business that transmits virtual currency or exchanges it for fiat currency.

Registration Process:

• Register with FinCEN within 180 days of commencing operations
• File FinCEN Form 114 (BSA E-Filing System)
• No registration fee at federal level
• Renewal: Update registration every two years

Key Obligations:

• Implement comprehensive Anti-Money Laundering (AML) program
• Know Your Customer (KYC) procedures
• Suspicious Activity Report (SAR) filing
• Currency Transaction Report (CTR) filing for transactions over $10,000
• Travel Rule compliance for transactions over $3,000
• Recordkeeping requirements (5 years minimum)

SEC Registration (if applicable)

Required for: Businesses dealing with crypto assets classified as securities, including:

• Security token offerings
• Crypto investment funds
• Broker-dealers in crypto securities
• Investment advisers managing crypto assets

License Types:

• Broker-Dealer Registration: Form BD, extensive capital requirements
• Investment Adviser Registration: Form ADV, fiduciary duties
• Alternative Trading System (ATS): Form ATS, for crypto trading platforms dealing in securities

Requirements:

• Net capital requirements vary by activity
• Compliance officer appointment
• Cybersecurity programs
• Customer protection rules

CFTC Registration (if applicable)

Required for: Businesses dealing with crypto derivatives, futures, and commodities.

License Types:

• Futures Commission Merchant (FCM)
• Swap Dealer (SD)
• Commodity Pool Operator (CPO)
• Commodity Trading Advisor (CTA)

State-Level Licensing

Money Transmitter Licenses (MTL)

Required in: 48 states plus DC and Puerto Rico (Montana and South Carolina do not require MTL for crypto businesses as of 2025).

Key States and Requirements:

New York BitLicense:

• Most stringent state crypto license
• Application fee: $5,000
• Minimum net worth: Greater of $5,000 per outstanding transaction or 1% of first $5M + 0.5% of next $15M + 0.25% of excess
• Cybersecurity requirements
• Consumer protection standards
• Processing time: 6-24 months

Texas Money Transmitter License:

• Application fee: $5,000
• Net worth requirement: $500,000 minimum
• Surety bond: $300,000-$2,000,000 depending on volume
• Processing time: 6-12 months

California Money Transmitter License:

• Application fee: $5,000
• Permissible investments: 100% of outstanding payment obligations
• Surety bond: $250,000-$7,000,000 depending on volume
• Processing time: 9-18 months

General MTL Requirements Across States:

• Background checks on principals and key personnel
• Fingerprinting
• Financial statements (audited)
• Business plan
• AML/BSA compliance program
• Surety bonds or other security instruments
• Annual reporting and renewal fees

State-Specific Crypto Licenses

Several states have created specialized cryptocurrency licensing frameworks:

Wyoming Special Purpose Depository Institution (SPDI):

• Bank charter specifically for digital asset custody
• FDIC insurance not required
• Capital requirements based on risk-weighted assets
• Full reserve banking model

Nebraska Digital Asset Depository Institution:

• Similar to Wyoming SPDI
• Custody-focused charter
• State-chartered, not FDIC-insured

Banking and Custody Licenses

OCC Bank Charter

Cryptocurrency businesses seeking to operate as banks can apply for:

• National Bank Charter: Full banking powers
• Special Purpose National Bank Charter: Limited purpose (e.g., custody only)

Requirements:

• Minimum capital: $10-20 million typically
• Comprehensive business plan
• Risk management framework
• Board of directors with banking experience
• Processing time: 12-24 months

Trust Company Charter

Available in multiple states for crypto custody services:

• New York Trust Company: Rigorous requirements, strong reputation
• South Dakota Trust Company: Favorable trust laws
• Delaware Trust Company: Corporate-friendly jurisdiction

Typical Requirements:

• Minimum capital: $2-10 million depending on state
• Fiduciary standards
• Segregated client assets
• Insurance or bonding
• Regular examinations

Stablecoin-Specific Regulations

Stablecoin issuers face additional requirements:

• Reserve attestations (monthly or quarterly)
• Redemption guarantees
• Potential SEC registration if deemed a security
• State money transmitter licenses
• Banking partnerships for reserve management

DeFi and Smart Contract Platforms

Decentralized Finance (DeFi) platforms face regulatory uncertainty:

• No clear licensing framework as of 2025
• Potential SEC jurisdiction if tokens are securities
• Potential CFTC jurisdiction for derivatives
• FinCEN guidance suggests some DeFi protocols may need MSB registration
• State-by-state analysis required

Estimated Costs and Timeline

Minimum Compliance Package (Federal + 1-3 states):

• Legal and consulting fees: $200,000-$500,000
• Application fees: $50,000-$150,000
• Initial capital/bonds: $500,000-$2,000,000
• Timeline: 6-12 months

Full 50-State MTL Coverage:

• Legal and consulting fees: $1,000,000-$3,000,000
• Application fees: $250,000-$500,000
• Surety bonds: $5,000,000-$50,000,000 (varies by volume)
• Timeline: 18-36 months

National Bank Charter:

• Legal and consulting fees: $2,000,000-$5,000,000
• Minimum capital: $10,000,000-$50,000,000
• Timeline: 12-24 months

Ongoing Compliance Costs

• Annual legal and compliance: $500,000-$2,000,000+ depending on size
• Audits and examinations: $100,000-$500,000 annually
• License renewals: $50,000-$200,000 annually across all states
• AML/KYC technology and personnel: $500,000-$5,000,000+ annually

Tax Classification

IRS treats cryptocurrency as property (not currency) for federal tax purposes.

Capital Gains Tax

Short-Term (<1 year): Taxed as ordinary income at 10-37% (2025 rates) Long-Term (>1 year): Preferential rates of 0%, 15%, or 20% based on income. Additional 3.8% NIIT may apply for high earners.

Taxable Events: Selling crypto for fiat, trading crypto-to-crypto, using crypto for purchases, receiving crypto as payment.

Cost Basis Methods: Specific Identification, FIFO (default), LIFO, HIFO. Must be consistently applied.

Ordinary Income Tax

Taxed at fair market value when received: mining rewards, staking rewards, airdrops (for services), salary/wages in crypto, yield farming rewards, referral bonuses, hard forks.

Self-Employment Tax: 15.3% (12.4% Social Security + 2.9% Medicare) if crypto activities constitute trade/business. Additional 0.9% Medicare tax over $200K/$250K.

Mining

Hobby: Rewards taxed as ordinary income; limited expense deductions (suspended through 2025). Business: Rewards taxed as self-employment income; full business expense deductions; quarterly estimated payments required.

Staking & DeFi

Staking: Taxed as ordinary income when received (Revenue Ruling 2023-14). LP Tokens: Likely taxable when deposited. Yield farming rewards taxed as ordinary income. Impermanent loss deductible only when position closed.

NFTs

Sales taxed as capital gains. Artist creation/sale taxed as ordinary income. Possible 28% collectibles rate (IRS guidance pending).

Losses & Deductions

Capital losses offset gains dollar-for-dollar. Net loss deduction: $3K/year against ordinary income; excess carried forward indefinitely. Wash Sale Rule: Does NOT apply to crypto (2025). Legislative risk exists.

Reporting

Form 8949 & Schedule D: All capital gains/losses Schedule 1: Ordinary crypto income (Line 8z) Schedule C: Business income from mining/trading Form 1040: Digital asset question mandatory FBAR: Required if foreign accounts >$10K (crypto exchange status unclear) Form 8938 (FATCA): Required for foreign assets exceeding thresholds ($50K-$600K)

State Tax

No income tax: AK, FL, NV, SD, TN, TX, WA, WY. Most states follow federal treatment.

Record-Keeping

Required: acquisition date, sale date, FMV at receipt, cost basis, sale proceeds, transaction type. Retain 3-7 years.

Penalties

Failure to report: 20% penalty. Fraud: 75% penalty + criminal prosecution. FBAR violations: $10K-$100K per violation.

IRS Enforcement

Increased enforcement since 2019. John Doe summons to exchanges. Automated matching of Form 1099-K/1099-B with returns.

Regulatory Environment

US banking sector historically cautious toward crypto due to AML/BSA concerns and reputational risk. Significant progress since 2020 with clearer OCC, Federal Reserve, and FDIC guidance. Major banks and specialized institutions now serve industry with rigorous due diligence.

Major National Banks

JPMorgan Chase: Institutional custody (Onyx), JPM Coin, services for Coinbase/Gemini. Institutional clients only. BNY Mellon: First major custody bank for crypto (2021). Institutional investors, asset managers. State Street: Crypto custody via State Street Digital. Institutional focus. U.S. Bank: Custody for institutional investment managers via NYDIG. Citibank: Custody/trading for institutional and HNW clients.

Regional & Community Banks

Metropolitan Commercial Bank: Stepped up post-Silvergate/Signature closures. Serves exchanges, wallet providers. Customers Bank: Real-time payment infrastructure for crypto businesses. Cross River Bank: BaaS for fintech/crypto companies. API-driven infrastructure. Provident Bank: NJ-based, crypto-friendly commercial banking.

Note: Silvergate Bank (liquidated March 2023) and Signature Bank (closed March 2023) were leading crypto banks before FTX collapse.

Specialized Crypto Banks

Anchorage Digital Bank: First federally chartered crypto bank (OCC 2021, converted to SD trust 2023). Full-service digital asset bank. Paxos Trust Company: NY limited purpose trust (NYDFS). Custody, stablecoin (USDP), partners with PayPal (PYUSD). BitGo Trust Company: SD trust. Largest independent digital asset custodian. Gemini Trust Company: NY limited purpose trust (NYDFS). Founded by Winklevoss twins. Coinbase Custody Trust Company: NY limited purpose trust. Segregated from exchange operations.

Services Available

Corporate Accounts: Commercial checking, merchant services, payroll, treasury management, international wires. Custody: Qualified custody under Investment Advisers Act, institutional custody with insurance, multi-sig security, segregated assets. Lending: Crypto-backed loans, lines of credit, working capital, equipment financing for mining. Payment/Settlement: RTGS systems, ACH services, wire transfers, FedNow integration (2023).

Account Opening Requirements

Licensing: FinCEN MSB registration, state money transmitter licenses, SEC/CFTC registration (if applicable). Compliance: AML/BSA program, KYC procedures, transaction monitoring, OFAC screening, cybersecurity policies. Financial: Audited financials (2-3 years), minimum capital ($500K-$5M), surety bonds, insurance (E&O, cyber, crime). Operational: Background checks, business plan, organizational documents, source of funds, customer base analysis.

Challenges

Timeline: 6-12 months typical for crypto businesses. Restrictions: Transaction limits, enhanced monitoring, restricted international transfers, limited cash transactions. Termination Risk: De-risking by banks, regulatory pressure, reputational concerns. Geographic: Limited crypto-friendly banks create concentration risk. East/West Coast have more options.

Recent Regulatory Developments

OCC (2020-2021): Banks may provide custody (Letter 1170), hold stablecoin reserves (Letter 1172), use stablecoins for payments (Letter 1174). Federal Reserve: SR 22-6 (Aug 2022) requires Fed approval for state member banks. Increased scrutiny post-FTX. FDIC: FIL-16-2022 requires notification before crypto activities. Pause on new approvals (2023) post-bank failures. Legislative: Stablecoin legislation pending (2025). Market structure bills addressing crypto regulation.

Alternatives

Stablecoin Rails: USDC, USDT, USDP for treasury/payments. On-chain settlement without banks. Fintech: BaaS providers, payment processors (Stripe, PayPal), neobanks. Offshore: International banks in Switzerland, Singapore, UAE. Correspondent banking relationships.

https://www.sec.gov/ | https://www.cftc.gov/ | https://www.fincen.gov/