United States of America

## Retail Trading Status: United States of America

**Date:** 2025-06-26

**Topic:** Retail_Trading_Status

**Status:** Allowed-Regulated

### 1. Current Status

**Allowed-Regulated**: Retail cryptocurrency trading is legally permitted in the United States of America but is subject to a complex and evolving framework of regulations at both federal and state levels. These include, but are not limited to, Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, registration and licensing for certain types of cryptocurrency businesses, and specific tax rules for cryptocurrency transactions.

### 2. Detailed Narrative Explanation

Individual citizens and residents in the United States are legally permitted to buy, sell, and hold cryptocurrencies. However, the regulatory landscape is multifaceted and involves several federal and state agencies. There isn't a single, comprehensive federal law specifically governing all aspects of cryptocurrency. Instead, existing financial regulations are often applied to digital assets, and new rules and guidance are continuously being developed.

**Federal Regulatory Oversight:**

*   **Securities and Exchange Commission (SEC):** The SEC has asserted jurisdiction over cryptocurrencies that it deems to be "securities" under the Howey Test. Issuers of such crypto-assets and platforms that facilitate their trading must comply with federal securities laws, including registration requirements. The SEC has brought numerous enforcement actions against entities for unregistered Initial Coin Offerings (ICOs) and for operating as unregistered securities exchanges.
*   **Commodity Futures Trading Commission (CFTC):** The CFTC generally views virtual currencies like Bitcoin as commodities and has jurisdiction over derivatives contracts based on these assets, such as futures and swaps. It also polices manipulative conduct in the spot markets for commodities, including cryptocurrencies.
*   **Financial Crimes Enforcement Network (FinCEN):** FinCEN, a bureau of the U.S. Department of the Treasury, plays a crucial role in combating money laundering and terrorist financing. It requires administrators and exchangers of convertible virtual currencies (CVCs) to register as Money Services Businesses (MSBs) and comply with AML/CFT (Combating the Financing of Terrorism) obligations, which include implementing KYC procedures, reporting suspicious activities, and maintaining records. This directly impacts cryptocurrency exchanges and other businesses that facilitate retail trading.
*   **Internal Revenue Service (IRS):** The IRS treats virtual currencies as property for federal tax purposes. This means that taxpayers must report gains or losses from cryptocurrency transactions, and these are subject to capital gains tax rules. The IRS has issued guidance and has been increasing its enforcement efforts in this area.
*   **Office of the Comptroller of the Currency (OCC):** The OCC, an independent bureau within the Department of the Treasury, has issued interpretive letters clarifying the authority of national banks and federal savings associations to engage in certain cryptocurrency-related activities, such as providing custody services for crypto assets.

**State-Level Regulation:**

In addition to federal oversight, many states have their own regulations pertaining to cryptocurrencies and virtual currency businesses. For example, New York has its BitLicense regulatory framework, which requires businesses involved in virtual currency activities to obtain a license from the New York State Department of Financial Services (NYSDFS). Other states have adopted different approaches, ranging from specific licensing regimes to applying existing money transmitter laws. This patchwork of state regulations adds another layer of complexity for retail traders and cryptocurrency platforms operating across the United States.

**Know Your Customer (KYC) and Anti-Money Laundering (AML) Requirements:**

Cryptocurrency exchanges and other financial institutions dealing with digital assets in the U.S. are generally required to implement robust KYC and AML programs. This typically involves verifying the identity of their customers, monitoring transactions for suspicious activity, and reporting certain transactions to FinCEN. These measures are intended to prevent illicit activities such as money laundering and terrorist financing.

**General Warnings and Investor Protection:**

Regulatory bodies like the SEC and CFTC frequently issue warnings to investors about the risks associated with cryptocurrency trading, including price volatility, fraud, and the potential for losses. These warnings emphasize the speculative nature of many digital assets and advise caution. Efforts are ongoing to enhance investor protection in the crypto markets.

**Historical Context and Nuance:**

The U.S. regulatory approach has been characterized by enforcement actions and evolving guidance rather than a single, overarching legislative framework. There have been numerous calls for greater regulatory clarity and a more coordinated federal approach. Recent years have seen increased focus from policymakers and regulators, including executive orders directing federal agencies to study digital assets and develop policy recommendations. The debate continues regarding the appropriate balance between fostering innovation and mitigating risks in the cryptocurrency space. The classification of specific digital assets (as securities, commodities, or something else) remains a significant area of contention and regulatory scrutiny, directly impacting how they can be traded and by whom.

In summary, while retail trading of cryptocurrencies is permitted, it operates within a stringent and actively enforced regulatory environment that mandates compliance with financial crime laws, securities regulations (where applicable), commodities laws, and tax obligations.

### 3. Specific, Relevant Text Excerpts

*   **FinCEN on Money Services Businesses (MSBs):**
    > "A person that provides money transmission services is a money transmitter and must register with FinCEN as a money services business (MSB)... An administrator or exchanger of [convertible virtual currencies] that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN regulations..."
    *   *Source:* FinCEN, "Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies" (FIN-2013-G001). While this guidance is from 2013, it remains foundational for FinCEN's approach. More recent statements and enforcement actions have reaffirmed this stance.

*   **IRS on Virtual Currency as Property:**
    > "The Internal Revenue Service (IRS) is aware that some taxpayers have had virtual currency transactions that they have not reported on their tax returns. For U.S. tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. Among other things, this means that taxpayers who receive virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received."
    *   *Source:* IRS, "Virtual Currencies" page.

*   **SEC Chairman Gary Gensler on Crypto Markets (Illustrative of SEC's Stance, though specific quotes evolve):**
    While a direct quote from 2025 is not possible, SEC Chair Gary Gensler has consistently stated that many crypto tokens are securities and that crypto exchanges should register with the SEC. For instance, in a speech on September 8, 2022, he remarked:
    > "Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Offers and sales of these crypto security tokens are covered under the securities laws...Further, I’ve asked staff to work with entrepreneurs and others to register their tokens where appropriate as securities and to register their platforms where appropriate as exchanges or broker-dealers."
    *   *Source:* U.S. Securities and Exchange Commission, "Remarks Before the Practising Law Institute - SEC Speaks" (September 8, 2022). This sentiment has continued to guide SEC actions.

*   **CFTC on Digital Assets as Commodities:**
    > "The CFTC’s jurisdiction is implicated when a virtual currency is used in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce. Virtual currencies are considered commodities under the Commodity Exchange Act (CEA)."
    *   *Source:* CFTC, "Virtual Currencies" (Primer).

### 4. Direct, Accessible URL Links

*   **FinCEN - Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies (FIN-2013-G001):** [https://www.fincen.gov/sites/default/files/shared/FIN-2013-G001.pdf](https://www.fincen.gov/sites/default/files/shared/FIN-2013-G001.pdf)
*   **IRS - Virtual Currencies:** [https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies](https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies)
*   **SEC - Remarks Before the Practising Law Institute - SEC Speaks (Gary Gensler, September 8, 2022):** [https://www.sec.gov/news/speech/gensler-sec-speaks-090822](https://www.sec.gov/news/speech/gensler-sec-speaks-090822) (This link provides an example of the SEC's reasoning; more current speeches and statements can be found on the SEC website: [https://www.sec.gov/news/speeches](https://www.sec.gov/news/speeches)).
*   **CFTC - Virtual Currencies (Primer):** [https://www.cftc.gov/sites/default/files/2019-12/oceo_virtualcurrenciesprimer1018.pdf](https://www.cftc.gov/sites/default/files/2019-12/oceo_virtualcurrenciesprimer1018.pdf) (While dated December 2019, it provides foundational information. For the latest actions and statements, refer to the CFTC website: [https://www.cftc.gov](https://www.cftc.gov)).
*   **New York State Department of Financial Services (NYSDFS) - Virtual Currency Business Activity:** [https://www.dfs.ny.gov/virtual_currency](https://www.dfs.ny.gov/virtual_currency) (As an example of state-level regulation).

This report reflects the status based on the complex interplay of existing regulations and ongoing developments. Users should always consult with legal and financial professionals for advice tailored to their specific circumstances.