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Crypto Law/Level VIII · Around the world/8.1 The Americas/Lesson 1

United States: federal and state layers

How US crypto law stacks federal agencies that police activities on top of state regulators that license businesses, and where Congress and the states stood in October 2026.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Holding in your own wallet triggers no tax until disposal, since Notice 2014-21 treats crypto as property, and FinCEN’s 2019 guidance (FIN-2019-G001) says a user acting for themselves is not a money transmitter. Catch: answer the Form 1040 digital-asset question truthfully every year.
  2. Hold each lot more than one year and sell in a low-income year: the 2026 long-term rate is 0% on taxable income up to $49,450 single or $98,900 joint (Rev. Proc. 2025-32). Catch: 15% applies above those amounts, and state tax may still apply.
  3. State layer: eight states, including Florida, Texas, Nevada, Wyoming and New Hampshire, levy no individual income tax in 2026, and Missouri exempts capital gains. Catch: the state must be your real domicile; a former state can audit a move made just before a sale.
  4. Give rather than sell: the 2026 gift-tax annual exclusion is $19,000 per recipient, and lots held until death get a stepped-up basis under IRC section 1014. Catch: a lifetime gift carries your original cost basis to the recipient, so the gain is deferred, not erased.
  5. When using a platform, pick one licensed in your state, checked free on NMLS Consumer Access or, in New York, the DFS BitLicense list. Catch: such brokers report your sales to the IRS on Form 1099-DA, so your own cost records must match.

MaterialsThe CSBS page on the Money Transmission Modernization Act, which tracks state adoptionNMLS Consumer Access (nmlsconsumeraccess.org), the public lookup for state money-transmitter licencesLessons 1.3.1 to 1.3.6 on the SEC, CFTC, IRS, FinCEN, OFAC and state regulators, and lessons 3.2.4 and 3.2.5 on the GENIUS Act and market-structure bills

Wonder

  1. If Washington regulates crypto, why does a platform still need a licence in almost every state?
  2. Which parts of US crypto law changed in 2025 and 2026, and which are still only proposals?
  3. Can a state do something with crypto that the federal government has not done?

Explore

  1. US crypto law has two layers. Federal agencies regulate activities wherever they happen: the SEC when a token deal is a securities transaction (lesson 1.3.1), the CFTC for commodities and their derivatives (lesson 1.3.2), the IRS for tax under Notice 2014-21, which treats virtual currency as property (lesson 1.3.3), FinCEN for anti-money-laundering duties under the Bank Secrecy Act (lesson 1.3.4) and OFAC for sanctions, where civil liability is strict (lesson 1.3.5). States sit underneath, licensing the businesses that hold or move customers’ money and coins. A single firm usually answers to both layers at once.
  2. The federal layer moved in 2025 and 2026 mostly through agency action. The SEC dropped its case against Coinbase on 27 February 2025 and, on 17 March 2026, adopted an interpretation effective 23 March 2026 that sorts crypto assets into five categories (lesson 3.2.2). Congress passed one crypto statute: the GENIUS Act, Public Law 119-27, signed on 18 July 2025, which takes effect on the earlier of 18 January 2027 or 120 days after final implementing rules (lesson 3.2.4). The market-structure bill, the CLARITY Act, passed the House 294-134 on 17 July 2025, but on 15 September 2026 a Senate cloture vote failed 49-50 (lesson 3.2.5).
  3. The state layer starts with money transmission. There is no general federal licence for a crypto exchange; registering with FinCEN as a money services business is a filing, not a licence. Most states instead require a money-transmitter licence from any business that receives money or value for transmission on behalf of their residents, and many apply that to custodial crypto platforms. To reduce fifty different rulebooks, the Conference of State Bank Supervisors drafted the Money Transmission Modernization Act; its own page reported in September 2026 that thirty-one states had enacted it in full or in part. The remaining states still differ on capital, bonding and exemptions.
  4. Two states built crypto-specific regimes. New York’s Department of Financial Services adopted the BitLicense, 23 NYCRR Part 200, in June 2015; it covers transmitting, custody, buying and selling as a business, exchanging, and issuing or administering virtual currency involving New York or its residents, with a limited purpose trust charter as an alternative (lesson 1.3.6). California’s Digital Financial Assets Law, run by the Department of Financial Protection and Innovation, went live on 1 July 2026: from that date covered businesses serving Californians must hold a licence or have submitted a completed application. Other states rely on their money-transmission statutes and guidance.
  5. States also experiment where Washington has not. Wyoming’s House Bill 74 of 2019 created the special purpose depository institution, a state bank charter designed for digital-asset custody; Kraken received one in September 2020. In 2025 several states authorised public money to hold crypto: New Hampshire’s HB 302, signed by Governor Ayotte on 6 May 2025, lets the state treasurer invest in precious metals and digital assets, and Texas enacted SB 21 in June 2025, creating a Texas Strategic Bitcoin Reserve. The GENIUS Act also keeps a state route for stablecoin issuers, but only while a state-qualified issuer has no more than $10 billion outstanding.
  6. For a professional, the practical exercise is a two-column map. Column one lists each activity of a business, such as custody, exchange, staking, lending or issuing a token, with the federal agency whose definition it may meet. Column two lists every state where customers live and the licence each state requires, checked against the state regulator’s site and NMLS Consumer Access. Gaps in column two are where enforcement usually starts, because a state can act even when federal policy is relaxed. Note in the margin anything that depends on pending law, such as the CLARITY Act or GENIUS Act implementing rules.

Key facts

  • IRS Notice 2014-21 treats virtual currency as property for US federal tax purposes.
  • The GENIUS Act, Public Law 119-27, was signed on 18 July 2025 and takes effect on the earlier of 18 January 2027 or 120 days after final implementing rules.
  • On 15 September 2026 a Senate cloture vote on the motion to proceed to the CLARITY Act (H.R. 3633) failed 49-50.
  • The Conference of State Bank Supervisors reported in September 2026 that thirty-one states had enacted its Money Transmission Modernization Act in full or in part.
  • California’s Digital Financial Assets Law required covered businesses to hold a licence or have submitted a completed application by 1 July 2026.
  • New Hampshire’s HB 302, signed on 6 May 2025, allows the state treasury to invest in precious metals and digital assets.

Exercise nine, six, three, one

9CollectList up to 9 crypto activities you take part in or watch closely (holding on an exchange, staking, using a stablecoin, running a kiosk, launching a token…) and the US state where each one touches you.
6ClusterSort them into 6 groups by which authority would care most: SEC, CFTC, IRS, FinCEN or OFAC, a state licensing regulator, or none clearly.
3DistillReduce the 6 to 3: the groups where a change in 2025-2026, or a still-pending bill, would most change your position.
1CrystallizeWrite 1 sentence naming the federal rule and the state rule that matter most to your own crypto activity, and how you would check each one.

Fact check

Dates, figures and claims checked against the published sources listed below.

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