Digital asset regulation and tokenization in the United States

In the United States, a digital asset project may be subject to federal and state rules simultaneously. Assessment starts with what the token represents and what the business does: issuing a security, transmitting funds, holding assets and facilitating trading are different functions. Registration for one activity or in one state does not necessarily resolve every requirement for entering the US market.

This structure matters both to domestic businesses and to overseas platforms serving US clients. Project preparation should separate asset classification, each intermediary’s obligations and distribution restrictions. This guide connects those questions with the responsibilities of the SEC, CFTC and FinCEN, distinguishing available routes from proposals and regimes whose application is deferred.

How the asset and transaction are classified

US regulation requires classifying both the asset and transaction before selecting an access route. The SEC's March 2026 interpretation, accompanied by CFTC guidance, distinguishes digital securities from other assets and examines when the latter are offered through an investment contract. The interpretive release was published and became effective on March 23; it is not a new Act of Congress.

A share or debt instrument represented digitally retains its securities character. An asset that is not itself a security may nonetheless form part of an investment contract through representations and managerial efforts associated with its offering. Technical utility, an NFT label or use of a smart contract does not itself resolve that analysis or confer an operational exemption.

Which responsibilities belong to federal and state authorities

The Securities and Exchange Commission, SEC, applies federal securities legislation. The Commodity Futures Trading Commission, CFTC, supervises commodity derivatives and has anti-fraud and anti-manipulation powers in covered spot markets. These functions should not be reduced to a mandatory CFTC license for every digital asset purchase or sale. Derivatives or financed products require their own assessment. On October 13, 2026, the CFTC published in the Federal Register an advance notice of proposed rulemaking, without rule text, on retail crypto asset transactions offered on a leveraged, margined or financed basis: relying on the existing Commodity Exchange Act, it previews a purpose-built registered market and its preliminary view on actual delivery to the customer. Comments are due by December 14, 2026, and the applicable regime has not yet changed.

The Financial Crimes Enforcement Network, FinCEN, administers Bank Secrecy Act obligations for covered persons. State supervisors regulate transmission and, in certain states, virtual currency services. Banking powers depend on the type of institution. Each Federal Reserve Bank decides on access to its accounts among legally eligible institutions. The Kansas City Fed granted on March 4, 2026, Kraken Financial, a Wyoming special purpose depository institution, a limited account for an initial one-year term, with restrictions. The Board proposed in May 2026 a “payment account” without interest or credit, without expanding eligibility, and asked Reserve Banks to pause decisions on institutions that are neither federally insured nor federally supervised. This federal and state allocation requires identifying who provides each service, where and to which customers, including where providers operate from abroad.

For a business combining several functions, that allocation should become a map of required permissions. Accepting and transmitting client funds, for example, needs a different assessment from developing software without control over those funds. Offering securities or derivatives additionally requires examination of their own regimes and intended distribution. No registration should be described as general approval of the project.

What authorization a project needs to operate

FinCEN's 2019 guidance links money transmitter status to the facts: accepting and transmitting value for others, subject to relevant exclusions. Merely developing or selling software does not automatically produce that classification; using it to transmit value may change the outcome. Money Services Business, MSB, registration addresses that scope and does not replace other permissions.

New York's public register evidences virtual currency licenses and limited purpose trust charters. Their existence demonstrates operational access, but coverage is state-specific and depends on authorized activities. Serving residents of other states requires checking their rules. BitLicense is not a federal license, and incorporation in one state does not automatically permit serving the entire country.

Securities trading requires assessing intermediary, exchange or alternative trading system registration and applicable exemptions. The SEC order of September 17, 2026, which the SEC calls the Innovation Exemption in its fact sheet, does not grant an authorization; it grants two five-year exemptions: it exempts certain tokenized securities venues, TSVs, from the definition of exchange under the Exchange Act, and certain liquidity providers from the definition of dealer. Its coverage depends on compliance with conditions; notifying commencement does not mean the SEC has approved the business or investment.

Which rights a tokenized security provides

The January 2026 SEC staff statement distinguishes issuer-sponsored tokenization from third-party models, including custodial entitlements and synthetic exposures. It expresses staff views without independent legal force. It is essential to identify whether holders obtain rights against the original issuer, an intermediated interest or a separate third-party obligation, alongside the legally effective register and transfer mechanism.

The September exemption covers certain National Market System, NMS, stocks traded through automated market makers and liquidity pools. It excludes primary issuance on the venue and synthetic exposures from its definition of covered stocks. A venue must verify that holders enjoy the same rights and privileges as the equivalent traditional class; merely tracking a share's price is insufficient.

The relief extends until September 17, 2031, subject to subsequent changes. It includes symbol and volume limits, advance disclosure and, for tokenization by unaffiliated third parties, issuer notice and an opportunity to object. The August 2026 Regulation Crypto Assets proposal is a separate proceeding: its new offering exemptions remain proposed and are not used here as effective permissions.

Which operating and stablecoin obligations apply

Covered MSBs must maintain an anti-money laundering program, compliance officer, training, independent review and applicable records and reports under FinCEN guidance. Obligations also extend to foreign providers conducting business wholly or substantially in the United States. Classification as a non-security asset does not itself remove these obligations or applicable economic sanctions.

For TSVs, the SEC order requires, among other conditions, US person status, auditable smart contracts that are public and deployed on a public, permissionless distributed ledger, public notice at least thirty calendar days before operating and retention of information. That combination shapes the design: access to trading is restricted, but the ledger cannot be. Anti-fraud provisions and other applicable laws remain. Liquidity provider relief requires trading for its own account without holding or custodying customer assets, and limits its securities activities to trading tokenized stocks in a liquidity pool operating under the venue exemption, so it cannot be combined with other securities intermediation; the order does not limit its non-securities activities.

The GENIUS Act, enacted on July 18, 2025, reserves the issuance of payment stablecoins in the United States to permitted issuers and provides for identifiable reserves of at least one-to-one, reserve disclosure, redemption rules and a prohibition on the issuer paying interest or yield solely for holding, using or retaining the token. Its definition of payment stablecoin excludes national currency, bank deposits, including those recorded using distributed ledger technology, and securities. The state route is available only to issuers whose total outstanding issuance does not exceed ten billion dollars; above that amount, the issuer must transition to the federal framework within 360 days or cease new issuance, unless a waiver is granted.

The general effective date follows section 20: eighteen months after enactment or one hundred and twenty days after relevant final federal regulations, if earlier. Treasury's September 30, 2026, rule identifies January 18, 2027, as the expected date; its state framework certification procedure does not mean that issuance under GENIUS is already authorized across the board. A second date should not be confused with the first: from July 18, 2028, subject to the exceptions in the Act, it will be unlawful for a digital asset service provider to offer or sell to persons in the United States payment stablecoins from issuers that are not permitted. The first date affects issuers; the second, those who offer or sell.

What to define before entering the market

Preparation starts by describing the product, legal rights and asset flows. The business should identify the issuer, entities receiving instructions or controlling keys, client types and states served. That description helps determine which registrations, licenses or exemptions require verification and which restrictions should be incorporated into the platform and its contracts.

Skadden’s analysis of the September 2026 exemption provides professional context on the covered platforms and liquidity providers. It should be read alongside the SEC order’s conditions and other applicable rules. A temporary route for one specific function does not resolve primary issuance, distribution or every form of custody. On that point, on October 6, 2026, the SEC published in the Federal Register a proposal, separate from Regulation Crypto Assets, under which registered investment advisers and regulated funds could hold crypto assets that are client funds or securities with state trust companies or, where no permitted custodian is available, through adviser self-custody, subject to conditions. It is a proposal and is not in force; comments are due by December 7, 2026.

Planning also needs a regulatory calendar. CLARITY remains a pending bill: on September 15, 2026, the Senate rejected cloture on the motion to proceed to H.R. 3633, by 49 votes to 50, when three-fifths was required. It is not the same initiative as FIT21 of 2024. GENIUS implementing rules remain proposals, such as Treasury's on state regimes and on issuance, offer and sale or the OCC's; as of October 18, 2026, only Treasury's interim procedural rule is in force. With no final rules, the one-hundred-and-twenty-day alternative no longer allows general commencement before January 18, 2027. The state guides complement this federal overview by examining local access and intended services.

To understand how this framework applies to your project, discuss your case with our team.