Political risk for crypto startups in the US — 2025–26
Political Risk for Crypto Startups in the US: Roadmap for 2025–2026
Introduction
Political uncertainty in the US is a key risk for crypto startups. The lack of federal legislation and aggressive enforcement require a proactive strategy involving robust compliance, jurisdictional diversification, and preparation for legal costs. This article provides a roadmap for minimizing these risks at stages from Pre-seed to Series B.
Methodology and Target Audience
Target Audience: Founders and C-level executives of crypto startups (Pre-seed to Series B), General Counsels (GC), and Chief Compliance Officers (CCO).
Analysis Methodology: The analysis is based on the study of public sources: bill texts (FIT21), official statements from regulators (SEC, CFTC, FinCEN), court filings, and reports from industry think tanks (Coin Center, Blockchain Association, a16z crypto). Scenario probabilities are based on consensus forecasts from analytical firms (e.g., Eurasia Group) and analysis of public statements by politicians. Financial benchmarks are expert estimates based on industry standards and require adaptation.
1. US Regulatory Landscape: Key Risks
Regulation of digital assets in the US remains fragmented and is carried out through "regulation by enforcement." This approach creates constant legal uncertainty.
Practical Lessons: SEC v. Ripple and SEC v. Coinbase
SEC v. Ripple: The court ruled that direct sales of XRP tokens to institutional investors constituted a securities offering, while programmatic sales on exchanges did not.
Conclusion for Startups: The method of sale and communication with token buyers is crucial. It is necessary to obtain a Legal Opinion before starting any sales and to clearly segment the audience.
SEC v. Coinbase: The regulator alleges that a number of tokens traded on the platform, as well as staking services, are unregistered securities.
Conclusion for Startups: Listing tokens and offering yield products (staking, lending) carry high risk. Even major players are vulnerable. Conduct a thorough analysis of every asset according to the Howey Test before listing it.
Key Regulators and Their Roles
| Regulator | Area of Responsibility | Impact on Startups |
|---|---|---|
| SEC | Views most tokens as securities (Howey Test). | Risk of multi-million dollar fines for unregistered securities offerings. |
| CFTC | Regulates derivatives on digital assets recognized as commodities (Bitcoin, Ether). | Licensing requirements for platforms with futures and options. |
| FinCEN | Sets rules for Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT). | Mandatory registration as a Money Services Business (MSB) and implementation of AML programs. |
| OFAC | Enforces economic sanctions. | Risk of asset freezing and criminal liability for transactions with sanctioned parties. |
State-Level Regulation
New York (NY): Requires obtaining a BitLicense — one of the strictest and most expensive licenses in the country.
California (CA): Passed the Digital Financial Assets Law (DFAL), which takes effect in July 2025. It requires licensing from the Department of Financial Protection and Innovation (DFPI) and introduces strict consumer protection rules.
Texas (TX): The Texas Department of Banking requires many crypto companies to obtain a Money Transmitter License (MTL), actively applying enforcement measures to violators.
2. Post-2024 Election Scenarios
Scenario A: Divided Government (Probability: High)
Rationale: Historical trends and current polling indicate a high probability of split control over Congress and the White House (Source: FiveThirtyEight analysis, Cook Political Report).
Consequences: Legislative paralysis. Regulation will continue through enforcement (SEC) and judicial precedents.
Scenario B: Unified Republican Control (Probability: Medium)
Rationale: Given the competitive nature of the elections, full control by one party is possible but not guaranteed.
Consequences: Increased probability of passing FIT21, which could grant more authority to the CFTC. Potential appointment of SEC leadership more favorable to the crypto industry.
Scenario C: Unified Democratic Control (Probability: Medium)
Rationale: Similar to Scenario B, full Democratic control is a possible but not predetermined outcome.
Consequences: Strengthened oversight with an emphasis on investor protection. Priority will be given to bills tightening requirements for stablecoin issuers and DeFi.
3. Staffing and Compliance Budget
| Stage | Recommended Staff (FTE) | Key Expense Items | Estimated Annual Budget (USD) |
|---|---|---|---|
| Pre-seed / Seed | 0.5–1 FTE (CCO/Lawyer, outsourced) | Legal consultations, development of basic policies. | 75,000–200,000 |
| Series A | 2–4 FTE (CCO, AML Analyst, Lawyer) | Software licenses (Chainalysis, TRM), salaries, external counsel. | 300,000–700,000 |
| Series B+ | 5+ FTE (Full Compliance Department) | Salaries, software, external audits, legal reserves, licensing. | 1,000,000+ |
Example for a Series A startup (payment platform) with $5M Annual Recurring Revenue (ARR):
- CCO Salary: ~$180,000 USD
- Salaries for 2 AML Analysts: ~$160,000 USD
- Software Licenses (KYC/AML): ~$100,000 USD
- External Legal Services (Retainer): ~$120,000 USD
Total: ~$560,000 USD per year (~11% of ARR).
4. Strategic Action Plan
4.1. 12-Month Priority Plan
| Period | Direction | Key Tasks | Responsible Parties |
|---|---|---|---|
| First 90 Days | Legal Protection | 1. Conduct legal analysis of the business model. 2. Appoint a Chief Compliance Officer (CCO). 3. Develop a basic Incident Response Plan (IRP). | CEO, GC |
| 3–6 Months | Compliance | 1. Integrate KYC/AML providers. 2. Approve internal policies (AML/CFT, Sanctions). 3. Begin process for D&O and Cyber insurance. | CCO, CTO |
| 6–12 Months | Scaling | 1. Apply for a license in an alternative jurisdiction (EU/UAE). 2. Conduct first independent compliance audit. 3. Establish SARs reporting process to FinCEN. | CCO, CEO |
4.2. Jurisdictional Diversification
| Jurisdiction | Key Regulatory Act | Capital Requirements (Est. USD) | Annual Costs (Est. USD) |
|---|---|---|---|
| USA | No single federal act | 5k–1M+ for staff (MTL) | 300k–2M+ |
| EU | MiCA | 55k–165k (for CASPs) | 200k–1M+ |
| UAE (Dubai) | VARA Framework | 100k–500k+ | 250k–1.5M+ |
| Switzerland | DLT Act | 110k–1.6M (FinTech) | 400k–2M+ |
Note: Estimates depend on license type (custodial, payment) and scale of operations.
4.3. Key Performance Indicators (KPIs) for Compliance
| KPI | Calculation Method | Data Source | Target Value |
|---|---|---|---|
| Regulatory Response Time | Time from receipt to sending confirmation. | Email/CRM | < 48 hours |
| % Auto-Verified Transactions | (Auto-passed / Total transactions) * 100% | AML System | > 95% |
| AML False Positive Rate | (False Alerts / Total Alerts) * 100% | AML System | < 5% |
| Sanctioned Address Block Time | Time from list update to block. | Sanctions Screener | < 1 hour |
5. Preparing for Litigation Risks
5.1. Incident Response Plan (IRP)
Response Timeline (0–2 hours):
- CCO/GC immediately notifies the CEO and activates the response team.
- Contact is established with a pre-selected law firm.
- CTO initiates a "Legal Hold" — suspension of automatic deletion of all relevant data.
- An internal announcement is issued to employees.
Employee Notification Template (Legal Hold Notice):
Subject: CONFIDENTIAL: Document Retention Notice
Due to [[brief, neutral description, e.g., "receipt of an official inquiry"]], the company is implementing a document retention requirement (Legal Hold). You are required to preserve all documents, data, and correspondence related to [[subject of inquiry]]. Deleting, altering, or destroying any information is strictly prohibited. Direct all questions to the legal department.
IRP Contact List Template:
| Role | Name (Position) | Contact (Phone, Email) |
|---|---|---|
| IRP Lead | [Name], CCO | [Contacts] |
| External Counsel | [Name], [Firm] | [Contacts] |
| Technical Contact (IT) | [Name], CTO/Head of IT | [Contacts] |
5.2. Legal Reserve and Insurance
Legal Reserve: Set aside 3–10% of the funding round or 2–5% of annual revenue for litigation costs.
Insurance: Mandatory acquisition of D&O (Directors and Officers) and Cyber Insurance policies.
6. "Must-Have" Documents by Stage
| Stage | Mandatory Documents and Policies |
|---|---|
| Pre-seed / Seed | AML/CFT Policy, Terms of Service, Privacy Policy, Incident Response Plan (basic). |
| Series A | Sanctions Policy, Data Retention Policy, Whistleblower Policy, Code of Conduct, independent Legal Opinion on the token. |
| Series B+ | Results of independent AML program audit, certification (SOC 2, ISO 27001), comprehensive risk management program. |
Conclusion: Practical Checklist for CEOs
- Conduct a Legal Audit: Order an analysis of your business model from a qualified law firm regarding compliance with US securities laws.
- Appoint a CCO: Appoint a Chief Compliance Officer with sufficient authority and resources.
- Budget for Compliance: Include legal, software, and staffing costs in your financial model. This is not an option; it is the cost of doing business.
- Develop a "Plan B": Begin the registration and licensing process in a jurisdiction with clear regulation (e.g., EU under MiCA).
- Prepare an IRP: Ensure you have an action plan, vetted by lawyers, in case of a regulatory inquiry.
Appendix: Sources and Links
-
Financial Innovation and Technology for the 21st Century Act (FIT21):
https://www.congress.gov/bill/118th-congress/house-bill/4763 (Accessed: 10.15.2024). -
Markets in Crypto-Assets (MiCA) Regulation:
https://www.eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023R1114 (Accessed: 10.15.2024). -
California Digital Financial Assets Law (DFAL) Text:
https://dfpi.ca.gov/digital-financial-assets-law/ (Accessed: 10.15.2024).