The digital asset sector is experiencing a moment of transformative regulatory change.

From executive orders to bipartisan legislation, firms must navigate a growing mosaic of rules and oversight bodies.

Recent Executive and Legislative Milestones

In January 2025, Executive Order 14178 set the stage for reinvigorating American leadership in financial technology.

By establishing a President’s Working Group, the order called for comprehensive comprehensive core regulatory milestones to be developed.

The House passage of the Digital Asset Market Clarity Act, or CLARITY Act, in July introduced measures clarifying SEC and CFTC roles, while the Stablecoins Act of 2025, known as the GENIUS Act, defined a federal oversight framework for stablecoin issuance.

Meanwhile, an SEC proposal in September focused on ethical principles and the Howey Test, ensuring alignment with longstanding securities laws.

Tax authorities also advanced compliance, unveiling IRS Form 1099-DA for reporting 2025 digital asset transactions and signaling more rigorous basis reporting to follow.

According to industry estimates, the global digital asset market surpassed $3 trillion in 2024, while enforcement actions by the SEC and CFTC rose by over 40% year-over-year, highlighting elevated regulatory scrutiny.

These legislative efforts operate in tandem with international frameworks such as the European Union’s Markets in Crypto-Assets Regulation (MiCA), reflecting a global appetite for coherent digital asset governance and cross-border cooperation.

The President’s Working Group aims to deliver finalized proposals by September 30, 2025, underscoring the urgency of establishing modernized digital asset oversight frameworks that promote innovation and stability.

Jurisdictional Authority and Regulatory Overlaps

Navigating regulatory overlaps requires a clear understanding of the roles assigned to each agency.

Beyond these primary agencies, the DOJ has launched a National Cryptocurrency Enforcement Team, focusing on fraud and illicit finance, while the IRS intensifies audits on crypto transactions to curb tax evasion.

This multi-agency ecosystem demands that firms develop integrated compliance strategies to address fragmented regulatory compliance mandates and reduce exposure to enforcement actions.

Compliance Requirements and Modernization

Modern compliance frameworks require firms to adopt rigorous practices for custody, disclosure, and fund segregation.

Digital assets must be held with Qualified Digital Asset Custodians under supervised regimes, ensuring robust protection of client holdings.

Regulators now mandate enhanced recordkeeping on blockchain-based ledgers, standardizing transaction histories, source code disclosures, and asset economics.

• Custody with regulated third-party custodians
• Strict segregation of client and firm assets
• Detailed disclosure of token design and governance
• Selective DeFi reporting obligations with exemptions

These requirements must be supported by robust operational controls, including automated monitoring and reconciliation tools that detect anomalies in real time.

Firms are also encouraged to engage in regulatory sandboxes and pilot programs to test emerging models while maintaining full regulatory accountability standards.

Advancing AML, CFT, and Financial Crime Prevention

In response to growing risks, agencies have prioritized anti-money laundering and counter-financing of terrorism enhancements.

The President’s Working Group urged update of BSA/AML/CFT rules, striking a balance between privacy and enforcement.

Global bodies like the FATF, FSB, and BCBS are aligning international recommendations for VASPs, stablecoins, and decentralized finance, supporting a unified approach to financial crime prevention.

FinCEN’s proposed guidelines include deploying advanced analytics and blockchain forensics, while the FATF’s ‘travel rule’ enforcement continues to shape VASP onboarding and transaction monitoring protocols.

Global illicit crypto flows were estimated at $22 billion in 2023, prompting enhanced risk assessments and cooperation among financial intelligence units worldwide.

Board Governance Expectations

Board members face increasing scrutiny to oversee digital asset strategies and associated risks.

Regulators demand board-level risk oversight and governance with actionable, risk-focused reporting on cybersecurity, market volatility, and compliance status.

Continuous training programs for executives and staff ensure organizational agility as regulatory landscapes shift.

Additionally, boards are expected to conduct independent third-party audits of digital asset operations and integrate environmental, social, and governance considerations into their oversight processes.

Tax and Financial Reporting

Tax compliance has surged in importance with new reporting obligations.

Brokers will use IRS Form 1099-DA to capture gross proceeds from digital asset trades in 2025, while future rules will require detailed basis reporting.

Cross-border operations now contend with divergent tax treatments, urging firms to develop coherent global reporting strategies and align with evolving OECD and FATF guidelines.

Internationally, the OECD’s Pillar Two and BEPS initiatives are under review to address digital asset tax transparency, prompting multinationals to reassess transfer pricing and intercompany digital service arrangements.

Industry and Market Impacts

Regulatory clarity unlocks fresh opportunities for institutional adoption and product innovation.

With the repeal of SEC SAB 121, banks can pursue custody and staking services, pending prudential approval.

Tokenization of traditional assets gains traction as regulatory frameworks validate new market structures, while consumer protections remain central through mandated disclosures and segregation rules.

Real-world tokenization projects, from government-issued digital bonds to fractionalized real estate tokens, illustrate how regulatory clarity can accelerate new asset classes and broaden investor participation.

Surveys indicate that over 75% of institutional investors plan to deploy tokenization strategies in the next two years, signaling robust market growth potential under clear regulatory regimes.

Strategic Considerations for Firms

To remain competitive and compliant, firms should adopt proactive approaches:

• Establish continuous compliance program integration with regulatory updates
• Maintain strategic dialogue with regulatory authorities such as SEC FinHub and OCC Innovation
• Review licensing needs under SEC, CFTC, NYDFS, FINRA, and NFA
• Develop scalable risk management frameworks for digital assets
• Prepare for cross-jurisdictional requirements and international standards

Investing in compliance technology, including distributed ledger analytics and regulatory intelligence platforms, helps firms anticipate requirements and drive efficiency across compliance, legal, and risk teams.

Regular scenario analyses and updating governance charters ensure that boards remain proactive, with compliance cycle reviews occurring at least quarterly to capture regulatory updates.

Conclusion

The digital asset landscape is in flux, characterized by dynamic regulations and global coordination efforts.

Organizations that embed adaptability, robust governance, and strategic foresight will not only comply but also thrive.

By staying attuned to bipartisan momentum for clarity in legislation and embracing modernized frameworks, firms can chart a path toward sustainable growth and innovation in the digital economy.

Looking ahead, leveraging emerging tools like AI-driven compliance dashboards and real-time reporting will position organizations to adapt swiftly in a regulatory environment defined by rapid change.