Crypto[1] is one of the most important disruptors in the past century of finance. On this subject, opinions abound: each one, strongly held and strongly defended.

Pessimists might caution, “What’s wrong with this picture?”: (1) intangible financial products, are being (2) written on intangible digital assets, often with (3) extreme leverage ratios, and are (4) usually bought and sold on unregulated or underregulated exchanges, as enabled by (5) decentralized technologies that are new and relatively untested with (6) questionable / unknown custodial and transactional security provisions, (7) in real time, 24/7, and (8) at global scale. At a minimum, pessimists might seek to have more certainty as to the size, segmentation, and growth of the crypto markets. They might urge that better protections be put in place to protect unknowing participants from cyber fraud, which is already exacerbated by artificial intelligence tools in the hands of bad actors. Pessimists seek industry responsibility. They demand fit-for-purpose regulation.

The Optimists, counter all this by saying the pessimists are creating unnecessary worrying: they claim we should celebrate this important moment in history because crypto could truly democratize finance if we just let it happen. They claim that the Golden Age of Crypto is upon us and that it is no less important than the Gilded Age in building a new society block by block; a society where participation both empowers us and redeems us. They assure us that the streets will be paved with gold in this bright new shared future, and argue that Crypto can allow everyday people and organizations hold and transfer novel, emerging digital asset classes at small scale, allowing for fractional ownership that everyday people could otherwise never afford. These arguments—taken together—suggest that fuller access to the crypto markets could rebalance the wealth imbalance we see today, and that everyday people could gain personal wealth in ways never before available to them.

At the same time, the realists urge prudence, caution, and careful deliberation. Realists claim that we must do the necessary work to create a regulatory framework that is resilient enough to protect us as individuals and society as a whole.

Will the winds of crypto carve out a destructive path of change across the entire financial landscape? Will crypto uproot entire sets of regulations as well as the regulatory agencies that manage them? Or will brisk crypto breezes blow out a few cobwebs, offering novel ways to revisit and reorganize, while improving a contradictory and confusing regulatory framework that has frustrated us for a long time.

I am a lawyer, but I am also a historian. Crypto is in its infancy—so I must caution that “those who cannot remember the past are condemned to repeat it.”[2] With the 100th anniversary of 1929 nearly upon us, I would be remiss if I did not note that rampant market speculation run amok, fueled by the availability of credit, high levels of debt, and a clubby environment for pump and dump schemes all abounded in 1929 as well. They led to a market collapse that nearly took down America.

But in the direct aftermath of the Great Crash, lessons were learned, the country rebuilt, and new laws were written to protect us. Americans may be defined by our entrepreneurial culture, but we are also held to account by regulation, which while it can be cumbersome, remains some of the strongest and most reliable in the world.

It’s best to get ahead of a problem than to react to it—and we are definitely at a point in time, where there is a strong potential for fraud, manipulation, and—yes—for market collapse.

Are we in a perfect storm now?

Is the crypto hurricane about to come onshore and upend finance as we know it?

Or is this simply a tempest in a teapot?

Crypto market

The U.S. only accounts for a fraction of the crypto market. At present, a handful of crypto futures and option products are now traded on U.S. commodities exchanges—but this regulated U.S. market is small when we compare it with the scale of digital assets, crypto derivatives, and spot crypto trading that is engaged in 24/7 around the world.

The expansion of crypto abroad puts the United States at a competitive disadvantage in this fast growing market. For many people schooled in business, including our current president, this paltry U.S. market share is a problem seeking a solution. One solution is to open up the United States crypto market and let the crypto chips fall where they may. But make no mistake, crypto is coming to the United States—affecting everything from brokerage to banking to insurance to your 401-k. In tandem, blockchain—the technology that enables crypto—is also transforming many other sectors, including those that rely on global supply chains with complex needs for source-to-market traceability held together by multiple contractual arrangements along the way.

Three days after being sworn into office for his second term, President Donald J. Trump issued Executive Order 14178,[3] Strengthening American Leadership in Digital Financial Technology. Drawing a bright line between himself and his predecessor, he quickly declared that his administration would “make America the Bitcoin superpower of the world and the crypto capital of the planet.”

President Trump directed the Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), Securities and Exchange Commission (SEC), the Financial Crimes Enforcement Network (FinCEN), and the Internal Revenue Service (IRS) to move away from regulation by enforcement to regulation by rulemaking. To convene committee after committee of crypto experts to import some real-world wisdom for lawmakers. To enable “regulatory sandboxes” to rapidly develop and help frame necessary oversight and control for these new asset classes. To consider the regulatory overhaul of several traditional markets with the knowledge that banking and derivatives markets would likely be next in line. To get industry involved to help get the job done.

President Trump remains enthusiastic. He sees opportunities and seems undeterred by traditional regulatory frameworks and traditional ways of doing things. His executive order on January 23, 2025, was the first among many pro-crypto measures from his administration that continue to ripple across various branches of government in 2025.

Executive Order 14178 also established the President’s Working Group on Digital Asset Markets (PWG), requiring that the group deliver a report to the president within 180 days to “recommend regulatory and legislative proposals that advance the policies established in [EO 14178].” The PWG proceeded according to plan, delivering a detailed 160-page report with numerous recommendations to the president’s desk in late July 2025.[4]

The report stated five key objectives:

1. Position the United States as the crypto world leader;
2. Allow banks to serve crypto businesses, and allow bank customers access to crypto;
3. Strengthen the US dollar through adoption of dollar-backed stablecoins;
4. Modernize anti-money laundering rules to combat fraud; and
5. Ensure fair and predictable crypto taxation that eliminates tax compliance hurdles.[5]

Along with many others, I follow these developments with much interest. And, I was honored to testify before the Senate Finance Committee on the taxation of digital assets in October of 2025.

Crypto-speak

Let’s have a quick look at some of the terms used in the evolving decentralized finance (De-Fi) markets.

Digital assets

A “digital asset” is a digital representation of value that can be owned and transferred electronically on a blockchain (see Blockchain and DLT, below). Digital assets are far broader than cryptocurrency alone. Digital assets include anything digitally represented and owned, ranging from currency to art to property rights to real-world commodities.

The key difference between digital assets and traditional assets is that traditional assets typically require trusted intermediaries (banks, government agencies, brokers) to verify and transfer ownership, while digital assets often operate with reduced or different types of intermediation. Distributed Ledger Technology (DLT) also supports the concept of “smart contracts,” where terms of agreement between a buyer and seller, for example, are written into lines of computer code, and are self-executing.

A digital asset is an electronic certificate of ownership or value that:

• Can be transferred between parties. Transfer typically occurs directly across digital networks from peer-to-peer without intermediaries or brokers, anywhere around the world quickly and at low cost.
• Has specific properties and rights attached to it (a mathematical proof means individuals can independently verify their holdings).
• Can be independently verified without relying on a central authority, which allows for public verification of asset ownership (using pseudonymous identifiers), transaction history, total supply of assets, and rules governing the asset, and
• Is secured through cryptographic methods (cryptographic keys; essentially, very secure passwords granting exclusive control over that asset on a given network).

Blockchain and DLT

Digital assets are recorded on a computer program called a “distributed ledger” tracks ownership and transfers. The technology used to do so is a type of digital ledger technology (DLT) called “blockchain.”

As Geeks for Geeks explains, “A blockchain is a digital ledger of transactions distributed across the entire network of computers (or nodes) on the blockchain. Distributed ledgers use independent nodes to record, share, and synchronize transactions in their respective electronic ledgers instead of keeping them in one centralized server.” Geek for Geeks goes on to explain that a blockchain uses several technologies including digital signatures, distributed networks, encryption/decryption methods, and DLT. Blockchain is one type of DLT in which transactions are recorded with an unchangeable cryptographic signature called a hash, which is why distributed ledgers are often called blockchains.[6]

Blockchain is a type of DLT where blocks are added in the form of a chain. Other DLT types include DAG (focused on two-degrees of separation verification on transaction sequences), Hashgraph (focused on consensus building), Holochain (agent-centric rather than data-centric), and Radix/Tempo (transactions added in the order of the event rather than time). Being public or semi-public in character, no single party controls the distributed ledger—which advocates claim makes management more transparent, open to validation, better fault tolerance, more efficient, and secure.

Digital asset classes

• Cryptocurrencies: Digital tokens that reflect stored value, like Bitcoin and others.
• Stablecoins: Digital assets designed to maintain a stable value.
• Security Tokens: Digital representations of traditional investments, like stocks or bonds.
• Utility Tokens: Digital assets that provide access to specific products or services.
• Non-Fungible Tokens (NFTs): Unique digital tokens representing art, collectibles, or access rights.
• Real World Asset (RWA) Tokens: Digital representations of physical assets like real estate, commodities, or securities.[7]
• Digital asset-based derivatives (loosely, also “crypto derivatives”): digital asset derivatives are similar to traditional derivatives products, referencing underlying digital assets or variables such as cryptocurrencies.[8]

Tokenization

Tokenization comes up frequently as we dig deeper into the world of digital assets. Real world assets can be “tokenized” using blockchain technology to record ownership and transfer real world assets. Ownership of a real world asset is represented on the blockchain by using a “digital twin” to tokenize it. Unlike a simple digital file held on a personal computer that anyone can copy, most tokens cannot be double-spent (digital scarcity), have verifiable ownership, and can include conditions for their use or transfer (programmable rules).

Let’s look at a real world example. Traditionally, real estate ownership has been recorded in title registries, confirmed through title searches. Real estate can, however, be tokenized and maintained on a blockchain to record and confirm ownership. An immutable chain of real estate tokens, along with current and prior ownership records, can be readily inspected on the blockchain. In addition, fractional ownership is possible by dividing a token into any number of “digital slices.” The actual real estate remains a real world asset, with ownership recorded and tracked on the blockchain.

Special Purpose Vehicles

Tokenization of real world assets can also be accomplished through the use of special purpose vehicles (SPVs) set up with the sole purpose of holding a single asset—the real world asset—and without any liabilities. Fractional ownership of the SPV and the ability to transfer that fractional ownership is the way to own and transfer the real world asset being held by the SPV.

[1] “Crypto” has become a generic term that is interchangeable with “Digital Assets” in popular vernacular. “Cryptocurrencies” are one category among many classes of digital assets. Digital assets include cryptocurrencies like Bitcoin, stablecoins, security tokens, utility tokens, non-fungible tokens, real world asset tokens and crypto derivatives / digital asset-based derivatives. I will go into each of these asset classes in greater detail below as I offer a primer on the crypto vernacular to begin this series.

[2] “When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained […], infancy is perpetual.” The Life of Reason: The Phases of Human Progress Vol. I, Reason in Common Sense, Jorge Agustín Nicolás Ruiz de Santayana y Borrás (1905-1906).

[3] Executive Order 14178—Strengthening American Leadership in Digital Financial Technology, Administration of Donald J. Trump, (Jan. 23, 2025), available at https://www.govinfo.gov/content/pkg/DCPD-202500169/pdf/DCPD-202500169.pdf

[4] Strengthening American Leadership in Digital Financial Technology, The President’s Working Group on Digital Asset Markets (Jul. 2025), available at https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf

[5] Strengthening American Leadership in Digital Financial Technology https://www.whitehouse.gov/crypto/

[6] Blockchain and Distributed Ledger Technology (DLT), Geeks for Geeks, (last updated, Sept. 29, 2025). https://www.geeksforgeeks.org/software-engineering/blockchain-and-distributed-ledger-technology-dlt/

[7] Crypto derivatives are becoming a major digital asset class, Gregory Damalis et al, Ernst & Young LLP (2022), available at https://www.ey.com/content/dam/ey-unified-site/ey-com/en-us/insights/financial-services/documents/ey-crypto-derivatives-pov_final4.pdf

[8] Crypto derivatives are becoming a major digital asset class, Gregory Damalis et al, Ernst & Young LLP (2022), available at https://www.ey.com/content/dam/ey-unified-site/ey-com/en-us/insights/financial-services/documents/ey-crypto-derivatives-pov_final4.pdf