Crypto — The Transformative Power of Decentralisation, Channelled Through Governments

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A Study on the United States (Part 1 of a Series)

This is my humble attempt to study, understand, and reflect on the growth of blockchain and crypto — particularly through the lens of regulations and law. These blogs are a record of an ongoing learning journey, and I welcome corrections, pushback, and better arguments.

Preamble: The Paradox at the Heart of Crypto Adoption

Blockchain and crypto are, in their purest form, a technology of decentralisation. They let value move without intermediaries. They let communities coordinate without corporations. They let contracts execute without courts. They let identity exist without gatekeepers. At their best, they promise a financial system that is open by default, resistant to censorship, transparent in its rules, and global from day one.

That is the potential. The reality is different.

Without clear rules, that power remains locked inside a niche — used by enthusiasts, feared by regulators, avoided by institutions, and invisible to the billions of people whose lives it could actually improve. Every transformative technology we have ever adopted — electricity, automobiles, the internet, aviation — became truly mainstream only after the rulebook caught up with the invention. Crypto is no different.

Here is where the apparent contradiction lives. Crypto is about decentralisation. Governments are centralised. How can one be the vehicle for the other?

I think the contradiction is less sharp than it first appears. In democratic societies, governments themselves are an attempt — imperfect, but real — to translate distributed public will into collective action. An elected legislature is, in some sense, a decentralised mechanism wearing the clothes of a central one. Laws that emerge from representative debate carry a quotient of decentralisation that a CEO’s memo does not. When a government writes a crypto law, it is not necessarily the opposite of the technology’s spirit. It can be the mechanism that finally lets the technology touch ordinary lives within the protection of the rule of law.

None of this is to suggest the state is the only path. Balaji Srinivasan’s Network State thesis argues the opposite — that crypto enables entirely new kinds of jurisdictions, built from the internet outward, whose citizens opt in voluntarily and whose authority is cryptographic rather than geographic. It is a serious, thought-provoking effort, and worth reading alongside anything a national legislature produces. But for the foreseeable future, most people will live, transact, and pay taxes under the laws of existing nation-states — which means the practical question for now is not whether governments should regulate crypto, but whether they will do it well.

So let us look at how the United States — among the jurisdictions whose choices shape this industry globally — has actually done it.

Federal Government

For over a decade, the U.S. approach to crypto could be summed up as: sue first, write the rules later. The SEC pursued exchanges. The CFTC claimed overlapping authority. The Treasury issued sporadic guidance. Congress debated and went home. Then 2024 and 2025 happened, and the dam finally broke.

What’s Happened So Far

The early years laid the groundwork in small, interpretive steps rather than full legislation:

• March 2014 — The IRS declared crypto to be property, not currency, in Notice 2014–21. Every trade became a taxable event overnight.
• September 2015 — The CFTC classified Bitcoin as a commodity in its Coinflip order, giving itself enforcement authority over fraud and derivatives.
• March 2022 — President Biden signed Executive Order 14067, the first whole-of-government crypto policy. It also launched what the industry later called “Operation Chokepoint 2.0” — informal pressure on banks to drop crypto clients.
• January 2024 — The SEC approved eleven spot Bitcoin ETFs in a single day, after years of rejections. BlackRock’s IBIT has since grown to over $72 billion in assets. Spot Ether ETFs followed in July.
• May 2024 — The House passed FIT21, the first major crypto market-structure bill to clear a chamber. It died in the Senate but became the blueprint for what came next.

Then came the Trump administration’s legislative blitz, and this is where the real shifts happened.

Executive Order 14178 — “Strengthening American Leadership in Digital Financial Technology” (January 23, 2025)

Three days into his second term, Trump signed the executive order that became the foundational document of the new U.S. crypto policy. It created the President’s Working Group on Digital Asset Markets, revoked Biden’s EO 14067, explicitly prohibited any federal agency from creating a Central Bank Digital Currency, and directed regulators to ensure crypto firms had fair access to banking services.

What changed: CBDC research at the Federal Reserve was halted. The “debanking” pressure on crypto firms was lifted. Crypto became an explicit policy priority rather than an enforcement target.

The Strategic Bitcoin Reserve (March 6, 2025)

Trump directed the Treasury to establish a Strategic Bitcoin Reserve, funded with Bitcoin already seized through criminal and civil forfeiture. A separate U.S. Digital Asset Stockpile was created for non-Bitcoin assets. The White House noted that premature sales of seized Bitcoin had cost taxpayers over $17 billion. The Treasury and Commerce Secretaries were authorised to acquire more BTC, but only through budget-neutral means.

What changed: The U.S. had been routinely auctioning off seized Bitcoin for years. Now estimated to hold 328,000 BTC as a permanent strategic reserve asset — the largest known sovereign Bitcoin holding in the world.

The GENIUS Act (Signed July 18, 2025)

The Guiding and Establishing National Innovation for U.S. Stablecoins Act is, without exaggeration, the most important piece of crypto legislation in U.S. history. It is the first comprehensive federal crypto statute. It passed the Senate 68–30 and the House 308–122 — numbers that tell you this was no longer a partisan fight.

Key provisions:

• Payment stablecoins must be backed 1:1 with cash or short-term Treasuries
• Issuers must publish monthly reserve disclosures and pass annual audits
• Only a “permitted payment stablecoin issuer” can offer stablecoins to U.S. users
• Stablecoin holders get priority over other creditors in an issuer’s insolvency
• Compliant stablecoins are explicitly neither securities nor commodities — a clean carve-out from SEC and CFTC jurisdiction

What changed: Before the GENIUS Act, Tether and Circle issued tens of billions in stablecoins under a messy patchwork of state money transmitter licenses, with no federal standards and no clear answer to the basic legal question of what a stablecoin even is. After the Act, the United States has a real rulebook — and the global crypto market briefly crossed $4 trillion in total value in the weeks that followed.

“I pledged that we would make the United States the crypto capital of the world, and that’s what we’ve done.” — President Donald Trump, GENIUS Act signing, July 18, 2025

The CLARITY Act (Passed the House July 17, 2025)

The Digital Asset Market Clarity Act finally takes on the jurisdictional question that has paralysed U.S. crypto regulation for a decade: is a token a security or a commodity? The answer: most blockchain-native tokens are “digital commodities” under CFTC authority, while the SEC retains jurisdiction over primary fundraising and investment contracts. It passed the House 294–134.

What changed (or will change): If the Senate passes it, the overlap between SEC and CFTC turf becomes a clear line. Exchanges will know which regulator they answer to. Token issuers will know whether to file disclosures under securities or commodities law. It is still pending in the Senate as of April 2026.

Also Worth Noting, More Briefly

• March 2025 — The OCC and FDIC rescinded prior guidance requiring banks to seek advance permission for crypto activities. The SEC rescinded the punitive Staff Accounting Bulletin 121, which had made crypto custody economically unworkable. The changes opened the door for traditional banks to begin offering crypto custody and related services — a reversal that institutions had been waiting years for.
• July 2025 — The House passed the Anti-CBDC Surveillance State Act (H.R. 1919), which would codify the executive ban on a retail CBDC into permanent statute. Pending Senate action.

The CBDC Question

America’s answer is a hard no. While 134 countries representing 98% of global GDP are exploring central bank digital currencies, the U.S. has gone the other way. The logic: rather than have the Federal Reserve issue digital money directly to citizens — which raises privacy, surveillance, and disintermediation concerns — let regulated private stablecoins, backed by dollars and Treasuries, do that work instead. The GENIUS Act is the positive side of that bet. The Anti-CBDC Act is the negative side. Together, they form a coherent strategy: private dollar-backed digital money, yes; government-issued digital dollars, no.

What’s Cooking

• CLARITY Act in the Senate — Treasury Secretary Scott Bessent has targeted spring 2026 for passage. Two competing Senate drafts (the Responsible Financial Innovation Act and the Digital Commodity Intermediaries Act) need to be reconciled first.
• The BITCOIN Act — Introduced by Senator Cynthia Lummis in March 2025, it would direct the Treasury to acquire 1 million Bitcoin over five years through budget-neutral means and hold it for a minimum of 20 years. Selling some of the U.S. gold reserves has been floated as a funding source.
• GENIUS Act rules — The Treasury issued its first proposed implementation rule in April 2026, with the full stablecoin regulatory regime expected to be live by November 2026.
• No CBDC Act — Senator Mike Lee’s bill to make the executive CBDC ban permanent statute.

State Governments

While Washington was gridlocked, the states were writing the actual crypto rulebook. Wyoming in particular became the laboratory where most of the interesting legal innovation happened.

What’s Happened So Far

Briefly, in chronological order:

• June 2015 — New York’s BitLicense created the first state crypto licensing regime. It was so onerous that Kraken, ShapeShift, Bitfinex and others simply stopped serving New York customers rather than comply. A cautionary tale about overregulation.
• 2019 — Wyoming’s Special Purpose Depository Institution (SPDI) charter created a bank charter specifically for crypto custody. Caitlin Long’s Custodia Bank became the most famous holder.
• July 2021 — Wyoming’s DAO LLC Supplement became the first U.S. law letting DAOs register as LLCs. It ultimately failed because LLC membership interests tend to be treated as securities, creating new legal risks. But it set the stage for what came next.

The Wyoming DUNA Act (Effective July 1, 2024)

This is the state-level law that actually matters. The Decentralized Unincorporated Nonprofit Association Act gave DAOs with 100 or more members a way to get legal recognition while preserving decentralisation. A DUNA can sign contracts, sue and be sued, pay taxes, and — critically — shield its members from personal liability. It can also engage in for-profit activities as long as profits advance the nonprofit purpose.

Why it matters: When the CFTC won a default judgment against Ooki DAO in 2023, the court treated the DAO as an unincorporated general partnership — meaning every member who voted on a governance proposal could be held personally liable for the organisation’s actions. Before the DUNA, that was the legal reality for every DAO in America. After the DUNA, DAOs finally have a legal home.

a16z crypto called Wyoming an “oasis” for DAOs and committed to directing its portfolio companies toward the structure.

“The DUNA gives DAOs legal existence, limited liability, and tax clarity — a breakthrough for decentralized governance.” — Miles Jennings, General Counsel, a16z crypto

The 2025 State Bitcoin Reserve Wave

Three states turned the Strategic Bitcoin Reserve idea into actual state-level law in 2025:

• New Hampshire (May 6, 2025) — HB 302, signed by Governor Kelly Ayotte, became the first state law authorising Bitcoin as a treasury reserve asset. It allows up to 5% of public funds in digital assets with a market cap over $500 billion — a threshold that currently limits eligibility to Bitcoin alone.
• Arizona (May 2025) — HB 2749 took a narrower approach, allowing the state to retain seized and unclaimed crypto in its original form rather than being forced to liquidate it. Two more ambitious bills allowing direct state investment were vetoed by Governor Katie Hobbs.
• Texas (June 22, 2025) — Governor Greg Abbott signed SB 21 and HB 4488 creating the Texas Strategic Bitcoin Reserve, with unusually strong legal protections to prevent future legislatures from dismantling it. On November 20, 2025, Texas became the first state to actually fund its reserve — with roughly $5 million in BlackRock’s IBIT ETF.

What’s Cooking

• The Reserve Race — Bitcoin reserve bills are pending in 17 or more states, including Michigan (up to 10% of reserves), Florida, Ohio, Massachusetts, and South Dakota. Similar bills have already failed in Wyoming, Pennsylvania, North Dakota, Montana, and Oklahoma.
• State-level anti-CBDC bills — Multiple states are passing laws banning CBDC use within their borders, complementing the federal effort.
• Pro-crypto local laws — Texas HB 4177 prohibits cities and counties from imposing crypto-specific restrictions. Florida SB 2688 bars public agencies from refusing crypto payments for taxes and fees. Houston became the first major U.S. city to accept Bitcoin for property taxes.

Closing Thoughts

The American story over the last eighteen months is the clearest real-world test of the argument I opened with. The potential of this technology had been sitting on the shelf for a decade, constrained not by the code but by the absence of law. Once the rules started arriving — a clear stablecoin framework, a strategic reserve, legal personhood for DAOs, banking access for crypto firms — adoption and institutional participation followed within months, not years. Over forty U.S. banks launched custody services. Texas put Bitcoin on its balance sheet. The global market crossed $4 trillion.

The broader pattern is hard to miss: the technology’s transformative power becomes real when it is channelled through democratic institutions — perhaps messy, compromised, slow, contested institutions — rather than despite them.

Next in this series: India and its regulatory contradictions, then Europe and the ambitious experiment called MiCA.

I am a student of this space, not an authority on it. If you spot an error, a missing piece, or a better interpretation — please let me know. The rules are changing faster than anyone can write about them, and the best any of us can do is keep learning in public.