How the 2025 Investment and Securities Act Reshapes Crypto Trading
The 2025 Investment and Securities Act created a three-tier classification system for crypto assets. This tool helps you determine which category your asset falls into under the new regulations.
Understanding your asset's classification is critical for compliance. This tool uses the 2025 Investment and Securities Act framework to determine which regulatory requirements apply to your asset. Remember that the CLARITY Act provides a clear three-tier system that simplifies compliance for market participants.
When the Investment and Securities Act 2025 a federal law that reorganizes how digital assets are regulated in the United States rolled out, the crypto world felt a seismic shift. Traders, custodians, and compliance officers all had to ask: what does this mean for daily operations, for product design, and for the bottom line? The answer is a mix of streamlined paperwork, new licensing paths, and a clearer label for every token you might hold.
Before July 2025, most crypto firms lived under a cloud of “regulation by enforcement.” The Securities and Exchange Commission (SEC) would chase down a token they thought looked like a security, while the Commodity Futures Trading Commission (CFTC) claimed jurisdiction over the same asset as a commodity. That tug‑of‑war created costly legal reviews, delayed product launches, and a constant fear of fines.
The crypto trading regulations introduced by the Investment and Securities Act 2025 put an end to that ambiguity. By codifying three distinct categories-digital commodities, investment contracts (security tokens), and permitted payment stablecoins-the law gives each market participant a roadmap instead of a maze.
The act’s core mechanism is best explained with the CLARITY Act a companion bill that sorts crypto assets into three regulatory buckets:
This structure removes the need for a token‑by‑token Howey analysis and gives firms a clear checklist: “Is my token a commodity, a security, or a stablecoin?”
Prior to the act, a broker‑dealer that wanted to list Bitcoin had to seek a separate CFTC registration or risk running afoul of the SEC’s anti‑fraud rules. Now the SEC must allow registered broker‑dealers to offer digital commodities alongside traditional securities, provided they comply with the new record‑keeping standards.
Exchanges will need to upgrade their blockchain‑based books and records to satisfy the SEC’s modernized filing requirements. Most vendors are already rolling out “crypto‑ready” modules that capture transaction hashes, custody proofs, and on‑chain audit trails.
Alternative Trading Systems (ATSs) gain a major advantage: they can host both equity ETFs and spot Bitcoin pools under a single regulatory umbrella, eliminating the need for duplicate compliance teams.
For RIAs, the biggest relief is the exemption from Rule 204A‑1 reporting on digital commodities. Because Bitcoin is now a commodity, advisors no longer have to pre‑clear employee personal trades or file Form PF disclosures for those positions. The compliance manual can be trimmed down to a single “crypto policy” that distinguishes commodities from securities.
Firms that focus exclusively on commodity‑type assets may consider registering as Commodity Trading Advisors (CTAs) with the CFTC. That path brings its own reporting obligations but often offers lower capital requirements than a full SEC‑registered advisory license.
Conversely, advisors dealing with security tokens must retain their SEC registration and continue to follow the traditional investment‑adviser rules-no shortcuts there.
The act also unlocks a new custody model. A September 2025 SEC no‑action letter (the “State Trust Letter”) lets regulated advisers hold crypto assets with qualified state trust companies. This gives institutional investors a federally‑backed safe‑harbor that was missing before.
For larger banks that prefer a federal charter, the GENIUS Act paves the way for a future amendment to the custodian rules, meaning we may soon see national banks offering insured crypto deposits.
| Aspect | Before 2025 | After 2025 |
|---|---|---|
| Asset Classification | Case‑by‑case Howey test | Three‑tier system (commodity, security, stablecoin) |
| Broker‑Dealer Access | Limited to securities; separate CFTC licensing needed for commodities | SEC must allow broker‑dealers to trade digital commodities and permitted stablecoins |
| State Blue‑Sky Laws | Applicable to many tokens | Digital commodities classified as covered securities → exemption |
| RIA Reporting | Rule 204A‑1 applies to most crypto holdings | Commodities excluded, reducing surveillance burden |
| Custody Options | Fragmented, limited to offshore or state‑level solutions | State trust company pathway; future federal custodian rules hinted |
This side‑by‑side view makes it clear why many institutional players are fast‑tracking product launches now that the uncertainty has lifted.
State Street Global Advisors announced an “on‑chain ETF” prototype that will hold a basket of digital commodities, leveraging the new CTA registration path. Meanwhile, Galaxy Asset Management’s SPDR Galaxy ETFs have added a Bitcoin‑commodity share class, allowing investors to gain exposure without navigating the old SEC‑CFTC tug‑of‑war.
On the exchange side, a major U.S. ATS rolled out a dual‑listing platform that hosts both a traditional equity index fund and a spot Ethereum pool, all under one SEC‑approved broker‑dealer license.
For smaller DeFi startups, the hill isn’t completely flat yet. The act’s compliance costs-especially for AML/KYC upgrades and on‑chain record‑keeping-are still a hurdle, but the clear regulatory path makes fundraising easier than it was in 2023.
Even with the 2025 framework in place, the SEC plans additional rulemakings on custody, on‑board reporting, and retail crypto products. The “Regulatory Flex Agenda” released in spring 2025 hints at tighter rules for crypto‑based mutual funds, which could affect how asset managers bundle digital commodities.
Congress may also refine the CLARITY Act’s definitions, especially around hybrid tokens that have both commodity and security features. Keeping an eye on the legislative calendar is now part of every crypto trading desk’s risk‑management routine.
Finally, global peers are watching. The EU’s MiCA regime continues to focus on all‑encompassing crypto regulation, while the U.S. takes a more targeted, stablecoin‑first approach. For traders, this means arbitrage opportunities may arise as different jurisdictions adopt divergent rules.
Yes. ETFs that hold digital commodities can now be structured as CTA‑registered products, eliminating the need for a separate securities exemption. Security‑token ETFs still require SEC registration, but the act simplifies the filing process.
No. Bitcoin is classified as a digital commodity under the act, and the SEC now permits broker‑dealers to offer it without a separate CFTC registration, provided they follow the new record‑keeping rules.
DeFi projects must assess whether their native tokens fall into the commodity or security category. If a token is a commodity, the protocol can operate under the CTA framework; if it’s a security, it must register with the SEC or qualify for an exemption. The act does not create a separate DeFi regulator.
The GENIUS Act requires USD‑backed stablecoins to hold a 1:1 reserve of liquid assets, undergo regular audits, and submit quarterly reports to the SEC. This transparency reduces redemption risk and aligns stablecoins with the same safety standards as traditional money‑market funds.
Implementation costs are higher for firms that lack existing compliance infrastructure. However, many SaaS compliance platforms now offer pre‑built modules for the 2025 rules, helping smaller players meet the standards without building everything from scratch.
From a patriotic standpoint, the United States has taken a decisive step toward reasserting its financial sovereignty. By mandating clear classifications, Congress eliminates the regulatory chaos that foreign competitors have savored. The act empowers American exchanges to compete on equal footing with overseas platforms. Moreover, the stringent compliance framework deters illicit actors that threaten our economic security.
The Investment and Securities Act 2025 fundamentally reshapes how we approach token classification.
For practitioners, the first step is to map every asset on your balance sheet to one of the three buckets defined by the CLARITY Act.
Digital commodities such as Bitcoin and Ethereum now fall under CFTC oversight, which means you no longer need a separate SEC registration to list them on a broker‑dealer platform.
If an asset passes the Howey test, it is slated as an investment contract and must be handled according to SEC rules, including filing the usual Form D where applicable.
Stablecoins that are pegged 1:1 to the U.S. dollar are covered by the GENIUS Act, requiring audited reserves and quarterly reporting.
From a compliance perspective, the most immediate change is the exemption of digital commodities from Rule 204A‑1, giving RIAs a lighter reporting burden.
This also means that employee personal trades in Bitcoin no longer trigger pre‑clearance processes, streamlining internal surveillance.
For firms that focus exclusively on commodities, registering as a CTA can lower capital requirements compared to a full SEC advisory license.
However, if you deal with security tokens, you must retain your SEC registration and continue to comply with traditional investment‑adviser regulations.
Custody providers should now evaluate whether a state‑trust company or a future federal custodian framework best fits their client base.
The SEC’s September 2025 no‑action letter provides a safe harbour for advisers to hold crypto with qualifying state trusts, which can be a quick win for many institutions.
On the technology side, you’ll need to upgrade your record‑keeping systems to capture transaction hashes, custody proofs, and on‑chain audit trails as mandated by the new filing requirements.
Many SaaS compliance platforms already offer modules that automate this data capture, reducing the need for custom development.
When launching a new product, ensure your prospectus or offering memorandum clearly states the token classification to avoid regulatory surprises.
Finally, keep an eye on upcoming SEC rulemakings around retail crypto products, as they may introduce additional reporting or capital requirements down the line.
Kyla MacLaren
Finally a law that actually tells us where Bitcoin belongs-no more guesswrok.