Frequently asked questions

Yes. Owning, buying, selling, and using digital assets is lawful throughout the United States. That does not mean the space is unregulated. A digital asset can be subject to federal securities law, commodities law, tax law, and anti-money-laundering rules, and to state licensing and securities regimes, depending on what the asset is and how it is used. The practical question for any business is not whether digital assets are legal but which of these regimes apply to it. The Digital Asset Regulation foundation maps that architecture in full.

No single agency does. At the federal level, the Securities and Exchange Commission regulates digital assets offered or sold as securities; the Commodity Futures Trading Commission regulates digital asset commodities and the derivatives written on them; the Internal Revenue Service administers their tax treatment; and the Financial Crimes Enforcement Network applies anti-money-laundering rules. The federal banking regulators oversee the digital asset activities of banks, and the states add money-transmitter licensing and their own securities laws. Which regulators reach a particular business depends on the assets it handles and the activities it conducts. The full division of authority is described in the Digital Asset Regulation foundation section of this website.

It depends on the asset and on how it is offered and sold. A digital asset is treated as a security when it is sold in a transaction that meets the investment-contract test of SEC v. W.J. Howey Co., 328 U.S. 293 (1946) — an investment of money in a common enterprise with a profit expectation derived from the efforts of others. A digital asset that is not a security is generally a commodity under the broad definition in the Commodity Exchange Act (7 U.S.C. § 1a(9)); Bitcoin and Ether are widely treated as commodities. Because the same token can be classified differently depending on how it is sold, classification is decided asset by asset and transaction by transaction. The Digital Asset Regulation foundation section of this website examines the classification question in depth.

Yes. The GENIUS Act, signed into law in July 2025, created the first federal framework for payment stablecoins. It allows payment stablecoins to be issued only by permitted issuers — bank subsidiaries, federally qualified nonbank issuers supervised by the Office of the Comptroller of the Currency, or issuers qualified under an approved state regime — and requires full one-to-one reserve backing, monthly reserve disclosures, and Bank Secrecy Act compliance. The Act’s requirements phase in over an implementation period set by the statute. The GENIUS Act framework is covered in the Digital Asset Regulation foundation section of this website.

For federal tax purposes the Internal Revenue Service treats digital assets as property rather than currency, a position stated in Notice 2014-21. Selling a digital asset, exchanging one token for another, or spending it is a taxable disposition on which gain or loss is recognized; digital assets received as compensation or as mining or staking rewards are income when received. Since 2025, custodial digital asset brokers report customer dispositions to the IRS on Form 1099-DA. This is general information and not tax advice — tax treatment depends on individual circumstances. The tax regime is summarized in the Digital Asset Regulation foundation section of this website.

Generally yes. A business that exchanges or transmits digital assets for customers is typically a money transmitter, which must register with the Financial Crimes Enforcement Network as a money services business and, in most states, hold a state money transmitter license. New York requires its dedicated ‘BitLicense,’ and California licenses digital asset businesses under its Digital Financial Assets Law. An exchange may also have obligations to the SEC or the CFTC depending on the assets and products it offers. Licensing and registration are addressed in the Digital Asset Regulation foundation section of this website.

Sometimes. Recovery depends heavily on the facts — how the assets moved, whether they reached an identifiable exchange or wallet, how much time has passed, and where the wrongdoers and the assets are located. The avenues can include tracing the assets on the blockchain, civil litigation against identifiable parties, and participation in government forfeiture or restitution proceedings. No outcome can be promised, and recovery becomes more difficult once assets have been routed through mixing services or offshore platforms, which is why acting promptly matters. The recovery avenues — forfeiture, tracing, and civil litigation — are framed in the Crypto Fraud & Asset Recovery foundation section of this website.

‘Pig butchering’ is a long-form investment-fraud scheme in which a stranger builds a relationship with the victim over weeks or months — often beginning with a misdirected text message or a social-media or dating-app contact — before introducing a fraudulent cryptocurrency investment. The victim is shown fabricated gains on a counterfeit trading platform and encouraged to deposit progressively larger sums; when the victim tries to withdraw, the funds are gone. The scheme combines patient social engineering with cryptocurrency payment rails and is frequently run by organized criminal operations. It is examined, with the recovery options available to victims, in the Pig Butchering topic resource.

An exit scam, often called a ‘rug pull,’ is a fraud in which the promoters of a digital asset project raise funds from investors and then abandon the project and disappear with the proceeds. It commonly takes the form of a newly launched token whose creators withdraw the liquidity supporting it, leaving holders with assets they cannot sell. Depending on the asset and the conduct, an exit scam can give rise to securities-fraud, commodities-fraud, and common-law fraud claims. The scheme and the legal responses to it are covered in the Crypto Exit Scam topic resource.

The options depend on the cause. A freeze may reflect an internal compliance hold, a law-enforcement request, or a dispute over the account terms, and the first step is to establish which. Where an exchange has entered bankruptcy or insolvency proceedings, customers are generally creditors in those proceedings, and how customer claims are treated — and whether deposited assets are property of the customer or of the estate — turns on the platform’s terms and the facts of the case. Deadlines in insolvency proceedings can be short, so timing matters. Customer claims against failed and distressed platforms, and the recovery routes available, are addressed in the Crypto Fraud & Asset Recovery foundation section of this website.

Most blockchains record every transaction on a public ledger, so the movement of assets from one address to another can often be followed, even across many hops. Tracing analysis is used to identify where stolen assets have come to rest — frequently at a regulated exchange, where they may be subject to a freeze, a subpoena, or a forfeiture request. Tracing becomes harder, though not always impossible, where assets are routed through mixing services, cross-chain bridges, or jurisdictions beyond the reach of U.S. legal process. Tracing and the recovery steps it supports are discussed in the Crypto Fraud & Asset Recovery foundation section of this website.

Treat it seriously and obtain counsel before responding. A contact from the SEC, the CFTC, a self-regulatory organization, or a state regulator can range from an informal request for information to a subpoena or a notice that enforcement staff intend to recommend action. What is said and produced early can shape the entire matter, and obligations to preserve documents may attach as soon as an inquiry is known. Counsel can assess what the request requires, what privileges and protections apply, and how to respond. The agencies and the scope of their authority are described in the Digital Asset Regulation foundation section of this website.

Yes. Digital asset markets are subject to the same kinds of manipulation seen in other markets, and to some that are specific to blockchain systems. Common forms include coordinated ‘pump-and-dump’ schemes, wash trading, spoofing, and the manipulation of the price oracles that decentralized finance protocols rely on. Manipulative conduct involving a digital asset commodity can be reached under the Commodity Exchange Act’s anti-manipulation provisions, and conduct involving a digital asset security under the Securities Exchange Act. Two of these forms are treated in depth in the Crypto Pump-and-Dump Schemes and Oracle Manipulation topic resources.

An oracle is a service that feeds external data — most often asset prices — into a blockchain so that smart contracts can act on it. Oracle manipulation is the practice of distorting that data feed, frequently by manipulating the price on a thinly traded market the oracle reads from, in order to induce a decentralized-finance protocol to misprice a transaction — for example, allowing an attacker to borrow far more than their collateral is worth. Depending on the assets and conduct involved, it can support claims and enforcement under commodities and securities anti-fraud and anti-manipulation law. The mechanics and the legal analysis are set out in the Oracle Manipulation topic resource.

Possibly. The SEC and CFTC whistleblower programs (15 U.S.C. § 78u-6 and 7 U.S.C. § 26) pay awards to eligible individuals whose original information leads to a successful enforcement action with monetary sanctions above a statutory threshold, and digital asset misconduct that violates the securities or commodities laws can qualify. Conduct that crosses both regimes may be reportable under both programs. Each program allows a whistleblower to file anonymously when represented by counsel, and each includes anti-retaliation protections. Eligibility, the award framework, and the reporting process are covered in the Whistleblower Programs topic resource.