After years of regulatory uncertainty, the cryptocurrency industry now operates within a clearer framework. New accounting standards, stablecoin legislation, and enhanced tax reporting requirements have begun reshaping how digital assets are treated under U.S. law.
Earlier this year, a Bloomberg analysis highlighted how 2026 will be less about drafting new rules and more about implementing and operationalizing those already in place.
The Financial Accounting Standards Board’s ASU 2023-08 allows certain crypto assets to be reported at fair value, while the GENIUS Act establishes a federal structure for payment stablecoins, including reserve requirements and monthly attestations. Meanwhile, the IRS’s Form 1099-DA introduces broker reporting for digital asset transactions beginning with the 2025 tax year.
For creditors and restructuring professionals, the significance lies in enforcement and exposure. Fair-value accounting introduces valuation judgment calls. Stablecoin reserve requirements raise questions about asset segregation and internal controls. Reporting gaps around decentralized finance activity may create inconsistencies between reported and actual economic activity.
ASU 2023-08
It is important to note however, as this legislation is still developing the scope has been narrowly focused and mostly aims to regulate the two largest cryptocurrencies, Bitcoin and Ethereum. There are several other cryptocurrencies that will remain largely unregulated for the time being. ASU 2023-08 only applies to fungible, cryptographically secured, blockchain-hosted tokens whose existence depends upon a distributed ledger and unlike typical stock does not confer any enforceable rights.
ASU 2023-08 requires crypto currency entities to disclose the name, cost basis, fair value, and number of units for each crypto asset holding. Annual reports with even more information will also be required. According to ASU 2023-08, the Financial Accounting Standards Board (FASB) decided to bring these regulations about after stakeholders requested more decision-useful information. FASB predicts this will reduce cost and complexity associated with applying the current cost-less-impairment accounting model for many entities. ASU 2023-08 is an improvement for creditors because the requirement of annual and interim reports allows more thorough risk analysis.
There are many cryptocurrencies that fall outside of the scope of ASU 2023-08 which FASB has already stated they do intend to issue regulations for but have yet to. There are several aspects of cryptocurrency that make it incredibly difficult to regulate. The diversity of transactions, the varied timing as they operate 24/7, and the often-unidentifiable customers all contribute to difficulty in regulating the market.
GENIUS Act and Stablecoins
The recently passed GENIUS Act, S. 1582, endeavors to regulate Stablecoins. The bill first gives a federal definition of “payment stablecoins” as digital assets issued for payment and redeemable at a predetermined fixed amount. Stablecoins are set at a fixed rate based on another currency, most commonly the US Dollar, which is largely how they differ from other cryptocurrencies.
The GENIUS act requires that the stablecoins be fully backed by liquid assets. Companies issuing stablecoins must have a reserve of at least one dollar of permitted reserves for every stablecoin issued. The permitted reserves are limited to coins and currency held at insured banks and credit unions, treasury bills, repurchase agreements, and similar government-issued assets approved by regulators.
The reserves backing the stablecoins must also be evaluated in monthly independent attestations. These attestations, while narrower than a typical audit are aimed to provide more information and assurance to users and purchasers of stablecoins. There have yet to be clear answers about who will perform these attestations and what they will cover.
The GENIUS Act references that registered public accounting firms will be eligible to conduct the attestations. This will exclude Certified Public Accountant’s who are not registered with the Public Company Accounting Oversight Board. Many have asked the Department of Treasury to reconsider this limitation, but no amendments have been proposed and passed yet.
While the GENIUS Act is bringing progress to regulating cryptocurrency and stablecoins there are still gaps that require regulation. According to TheStreetRoundtable, the House passed H.R. 3633, the Clarity Act in July of 2025, is currently on the Senate floor. Legislators from both the Democratic and Republican parties have voiced support for the Act.
Indications are that the Clarity Act would aid in clarifying not just what regulations will be put in place for cryptocurrency, but also which agencies will be responsible for those regulations. Which agency will regulate which aspects of this emerging market has been a contentious debate in recent years. The Securities Exchange Commission and the Commodity Futures Trading Commission have both claimed jurisdiction over certain components and this Act seeks to solidify their roles in regulation.
Tax Concerns
Beginning in the 2025 tax year, brokers must now report digital asset sales on the newly introduced Form 1099-DA. This poses unique challenges for taxpayers who now need to ascertain gains and losses on a wallet-by-wallet basis. Since cryptocurrencies are often moved across platforms reconstructing the transactional history poses unique difficulties that are not faced with other currencies.
DeFi will also remain largely outside of the reporting framework. Many activities like wrapping, liquidity-pool transactions, staking, and lending are not yet covered by regulations for brokers. This means that DeFi income may not appear on 1099-DA even when it is economically significant since the activities that generated it are not regulated.
Conclusion
As these frameworks are tested in practice, disputes are likely to follow. Questions around custody, control, reserve backing, and cost basis reporting may become central in insolvency proceedings. Where internal controls fall short, creditors may examine whether mismanagement, improper asset commingling, or preferential transactions occurred.
The regulatory architecture is now in place. The next phase will determine whether compliance mechanisms are robust – and how courts address failures when they are not.
THCA advises creditors in cryptocurrency-related insolvencies and cross-border asset recovery disputes, helping clients navigate complex regulatory and enforcement landscapes.
For more information, please contact us at +1 (617) 207-8670 or visit https://thcalaw.com/contact/