Bitcoin's Regulatory Evolution in the U.S.: Pathways to Legal Tender Acceptance

The U.S. regulatory landscape for Bitcoin has undergone a significant transformation in 2023–2025, marked by bipartisan legislative efforts, executive initiatives, and agency realignments. While Bitcoin remains unclassified as legal tender, the evolving framework suggests a growing recognition of its role in the financial ecosystem. This analysis explores how these developments position Bitcoin as a potential alternative to traditional legal tender, despite ongoing regulatory complexities.

Legislative Momentum and Regulatory Clarity

The GENIUS Act, passed by the U.S. House in July 2025, represents a landmark step in stabilizing the crypto sector. By establishing reserve requirements and compliance standards for stablecoins, the law addresses systemic risks while fostering innovation, according to Hodder Law's mid-year report. Complementing this, the CLARITY Act seeks to delineate the SEC and CFTC's oversight roles, aiming to resolve jurisdictional ambiguities that have hindered market confidence, as tracked in the US Crypto Policy Tracker. These bills reflect a strategic shift toward structured regulation, prioritizing investor protection without stifling technological advancement.

President Trump's Executive Order 14103, issued in August 2025, further underscores Bitcoin's strategic value. By mandating the creation of a Strategic Bitcoin Reserve, the administration signals a long-term commitment to leveraging Bitcoin as a store of value and a hedge against inflation (Executive Order 14103). This move aligns with the Presidential Working Group's advocacy for a pro-crypto framework, which explicitly opposes the development of a U.S. central bank digital currency (CBDC), as documented in the Presidential Working Group on Digital Asset Markets Report.

Agency Classifications and Enforcement Dynamics

Bitcoin's legal status remains fragmented across federal agencies. The SEC does not classify Bitcoin as a security under the Howey Test but has intensified rulemaking through initiatives like Project Crypto, which promotes tokenization of traditional assets, as noted by Hodder Law. Conversely, the CFTC regulates Bitcoin as a commodity, while the IRS taxes it as property, creating a patchwork of obligations for investors and businesses, according to the GovFacts explainer.

Despite these divergences, enforcement actions have shifted focus. The DOJ has pursued high-profile cases against privacy tool developers, raising concerns about regulatory overreach, a trend highlighted by Hodder Law. However, the SEC's pivot from enforcement to rule-based clarity-exemplified by Chair Atkins' reforms-suggests a more business-friendly approach, as also observed in Hodder Law's analysis.

State-Level Innovation and Autonomy

State legislatures have also played a pivotal role. Arizona's Bitcoin and Digital Assets Reserve Fund and Wyoming's prohibition on public CBDC funding highlight regional experimentation, per CryptoSlate's state bill tracker. Over 40 states introduced crypto-related legislation in 2025, reflecting a decentralized approach to regulation that complements federal efforts, according to NCSL's 2025 legislation review.

Challenges to Legal Tender Status

Despite progress, Bitcoin's path to legal tender status remains obstructed. The IRS's property classification complicates its use as a medium of exchange, while overlapping agency authority creates compliance hurdles. Additionally, the absence of a federal mandate for Bitcoin adoption-unlike El Salvador's example-means its acceptance remains voluntary.

Investment Implications and Future Outlook

The regulatory environment is increasingly favorable for Bitcoin adoption. The Strategic Bitcoin Reserve and CLARITY Act signal institutional confidence, while stablecoin regulations under the GENIUS Act reduce volatility risks. However, investors must navigate agency-specific compliance costs and enforcement uncertainties.

For Bitcoin to function as a legal tender alternative, broader legislative action-such as a federal classification update-is necessary. Until then, its role will remain complementary, driven by market demand and state-level innovation.