#CryptoRegulation What is cryptocurrency regulation?

Crypto regulations are the legal rules and guidelines that are present and issued by governments to shape how digital assets such as virtual currency operate. These laws have varied approaches across nations.

In the U.S., there are various states wherein some are friendly towards market participants embracing crypto with clear regulations, while others ban it outright.

Around 60 percent of U.S. citizens lack confidence in cryptocurrency trading or investment, considering the existing systems to be unreliable or unsafe. One primary reason for this distrust may be the absence of a single, consistent set of laws to regulate cryptocurrencies.

The existing regulations range from covering everything about how cryptocurrencies are to be created and traded to how they interact with traditional financial systems. Well-defined rules can help the crypto market in the following ways:

Help in protecting investors from scams and market manipulation

Ensure that there is transparency in the transaction, along with accurate information

Help prevent illegal activities like money laundering, fraud, misleading information, etc

Clarify the tax rules that apply to digital currencies

Encourages market participation and confidence in the investors while encouraging blockchain innovation

Regulates the risks that are or may be associated with the transactions

How is cryptocurrency regulated?

No defined regulation is used to regulate cryptocurrency in the U.S. as of 2025.

However, a major crypto legislation was introduced in 2024, i.e. the Financial Innovation and Technology for the 21st Century Act (or FIT21), that has been passed by the U.S. House of Representatives but has not yet been enforced. The legislation is aimed at emphasizing the role of the Commodity Futures Trading Commission (CFTC) as a lead crypto regulator in the U.S.

In the absence of one framework for cryptocurrency, the authorities try to regulate and enforce the already existing laws both at the federal and state levels, which are as follows