The Latest U.S. Cryptocurrency Regulatory Framework and Its Global Impact

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By Shen Jianguang & Zhu Taihui

On March 6, U.S. President Trump signed an executive order mandating the creation of a strategic Bitcoin reserve from federally confiscated assets, alongside establishing reserves comprising other digital assets (cryptocurrencies). This move has captured global attention. In reality, this represents just one component of the Trump administration's comprehensive crypto asset policy.

Prior to this, the Trump administration actively advanced the formulation of U.S. cryptocurrency regulations, addressing previous ambiguities in classification and overlapping jurisdictions among regulators. The updated regulatory framework has realigned with "supporting innovative development" as its core principle, marking significant progress in resolving regulatory divergences and establishing clear rules.

The Pre-Trump Regulatory Landscape: Fragmented Oversight Within Existing Financial Frameworks

In recent years, U.S. cryptocurrency (crypto asset) regulation operated under existing financial oversight systems with fragmented federal and state-level supervision. Key divisions emerged between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) regarding asset classification and requirements.

1. SEC's Howey Test Determines Securities Classification

The SEC maintains broad jurisdiction, defining digital assets expansively to include:

The Howey Test evaluates whether assets fall under SEC purview through three criteria:

  1. Investment of money - Typically satisfied through value exchange
  2. Common enterprise - Frequently present in digital asset networks
  3. Expectation of profits from others' efforts - The decisive factor

In 2019, the SEC's Framework for "Investment Contract" Analysis of Digital Assets provided specific guidance for applying these standards. The agency primarily enforces through:

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2. CFTC's Commodity Classification Approach

Since 2015 when Bitcoin was classified as a commodity under the Commodity Exchange Act, CFTC oversees:

However, CFTC lacks authority over spot market transactions unless they involve:

The 2022 Digital Commodity Consumer Protection Act (DCCPA) amendment:

3. FinCEN's Anti-Money Laundering Focus

The Financial Crimes Enforcement Network (FinCEN) regulates:

Key milestones:

Recent efforts intensified monitoring of:

4. State-Level Money Transmitter Licensing

Across 49 states (excluding Montana):

New York's BitLicense framework (updated December 2024) mandates:

Post-Trump Regulatory Reforms: Resolving Divergences and Clarifying Frameworks

The Trump administration accelerated crypto regulatory legislation:

  1. January 23 Executive Order: Strengthening U.S. Leadership in Digital Financial Technology

    • Promoted dollar-backed stablecoin growth
    • Banned CBDC development
    • Established Presidential Digital Assets Markets Working Group
  2. February 5 Announcement: Outlined plans for a "golden age of digital assets"
  3. March 6 Order: Created Bitcoin strategic reserves

Key Legislative Developments

1. 21st Century Financial Innovation and Technology Act (May 2024)

2. Stablecoin Regulation Proposals (February 2025)

3. SEC's 2025 Crypto Task Force Priorities

  1. Securities status clarification
  2. Jurisdictional boundaries
  3. Token issuance guidelines
  4. Registration pathway modifications
  5. Special purpose broker-dealer updates
  6. Investment advisor custody solutions
  7. Crypto lending/staking classification
  8. Crypto ETF considerations
  9. Clearing agency rules
  10. Cross-border sandbox frameworks

Future Outlook: Strengthening U.S. Market Leadership Through Innovation-Friendly Policies

With crypto-supportive officials dominating Trump's cabinet and Republican majorities in Congress, expect:

1. Streamlined Legislative Cooperation

2. Policy Shift Toward Responsible Innovation

3. Institutional Participation Boom

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Global Implications and Recommendations

The U.S. policy shift carries worldwide ramifications as:

Other jurisdictions responding with crypto frameworks:

Recommendations for China:

FAQ Section

Q: How does the Howey Test determine if a cryptocurrency is a security?
A: It evaluates whether there's (1) monetary investment in (2) a common enterprise with (3) profit expectations derived from others' efforts.

Q: What's the difference between SEC and CFTC crypto oversight?
A: SEC regulates securities-like assets on non-decentralized networks, while CFTC oversees commodity-classified assets on decentralized systems.

Q: When might the U.S. pass comprehensive crypto legislation?
A: Current trajectories suggest 2025 for both the 21st Century Financial Innovation Act and stablecoin-specific laws.

Q: How do state money transmitter laws affect crypto businesses?
A: They require licensing across 49 states with varying capital, reporting, and compliance obligations.

Q: Why is institutional activity dominating U.S. crypto markets?
A: Large transfers (>$1M) comprise 70% of volume, driven by ETFs and traditional financial players entering the space.

Q: What global impact does U.S. policy have?
A: As the largest market, U.S. regulations set de facto standards that often influence other nations' approaches.