Digital Assets · Regulatory
This paper summarizes significant developments in U.S. financial regulation history, outlines the global state of cryptocurrency regulations, reviews how crypto regulation may evolve in the United States, and analyzes investment implications. The explosive growth of DeFi and cryptocurrencies demands that today's regulators quickly — yet prudently — adopt a new regulatory framework.
In the Antebellum period, the U.S. financial system was regionally divided, with federal regulation weak and inconsistent. The National Bank Act of 1863 signaled the beginning of increased banking regulation. The 20th century saw the emergence of a modern regulatory structure — the FDIC (1933), SEC (1934), and CFTC (1974) each serving distinct financial subareas.
Most academic research supports the idea that an effective regulatory system positively affects economic growth. The deregulation of the late 1990s — including Glass-Steagall's repeal and Basel Accord changes — provided conditions for the 2008 global financial crisis, underscoring the value of proactive oversight.
Cryptocurrency regulation has moved faster in APAC than in the United States or Europe. Of the dozen-plus countries where cryptocurrency is banned, more than half are in Asia — including China, Turkey, Vietnam, Nepal, and Iraq. China has created one of the most hostile regulatory environments globally, citing environmental concerns, speculation risks, and money laundering. Its September 2021 declaration that "virtual currency-related business activities are illegal financial activities" caused Bitcoin to fall 10% overnight.
In contrast, Singapore's 2020 Payment Services Act established clear licensing and AML/CFT frameworks, attracting crypto companies relocating from China. Japan classifies cryptocurrencies as "virtual currencies" under its Payment Services Act and has embraced a regulated crypto-friendly environment.
The European Union has taken a coordinated approach through its Markets in Crypto Assets (MiCA) regulation — a comprehensive framework creating legal certainty for issuers and service providers. The UK has required crypto firms to register with the Financial Conduct Authority (FCA), while Switzerland's "Crypto Valley" in Zug has attracted major blockchain companies with favorable regulation.
The U.S. crypto regulatory environment is characterized by fragmentation and inter-agency conflict. The SEC, CFTC, FinCEN, and OCC have each staked out overlapping jurisdictions. The SEC tends to view most crypto assets as securities; the CFTC views Bitcoin and Ethereum as commodities; FinCEN focuses on AML compliance. This ambiguity creates significant regulatory risk for crypto companies operating in the U.S.
The regulatory trajectory globally points toward a framework that treats cryptocurrency exchanges like money service businesses — with licensing, AML/CFT requirements, and consumer protection rules — rather than treating crypto assets themselves as securities. Nations that establish clear, predictable frameworks earliest are attracting the most crypto capital and talent.