This year has seen a lot of activity in the cryptocurrency regulatory space, with several states amending existing statutes regulating money transmitters or instituting new regulatory mechanisms to address digital assets. For example, on June 27 Pennsylvania became the 27th state to regulate virtual currency and a few months later, Illinois signed two bills into law regulating cryptocurrencies and digital asset kiosks. Other states, including Florida and Missouri, have updated their money laundering and Know-Your-Customer (KYC) laws by revising or adding new definitions, setting new licensing thresholds or exemptions, and adding cryptocurrency-specific regulations. Connecticut passed a law requiring that money transmission licensees (including cryptocurrency exchanges) maintain a detailed winding-down plan with corresponding assets, and Illinois granted its state financial regulator, the Illinois Department of Financial and Professional Regulation, authority to regulate and supervise digital asset exchanges. Other notable states include New York and Louisiana, which both now require cryptocurrency exchanges to be licensed in a separate regime from money transmitters, featuring anti-money laundering, capital, and cybersecurity requirements.
On August 15, the Department of Justice (DOJ) and National Economic Council (NEC) launched a joint initiative to identify state-level laws that “hinder America’s economic growth, including those that burden industry and our small businesses” and opened comments to the public for 30 days. In response, a large cryptocurrency exchange published a comment on September 15, advocating for federal legislation that expressly preempts state regulations of money transmitters and digital assets. The cryptocurrency exchange identified four areas where state securities laws are purportedly impermissibly regulating areas of federal regulation: blue-sky laws, staking offerings, licensing, and self-custody. To resolve these issues, the exchange advocates for Congress to pass legislation, including the Digital Asset Market Clarity Act of 2025 (CLARITY Act) and Responsible Financial Innovation Act (RFIA), both of which are currently pending in the United States Senate. Together, these laws would exempt federally regulated digital assets from state blue-sky laws and require that intermediaries (such as the cryptocurrency exchange) be exclusively regulated by the CFTC. The exchange also seeks any passed federal legislation to include preemption provisions that apply retroactively, absolving cryptocurrency exchanges of any liability for transactions made before the legislation’s effective date.
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