The Consumer Financial Protection Bureau (CFPB) is poised to decrease its involvement in cryptocurrency regulation, signaling a notable shift in the oversight of digital assets in the United States. Other federal agencies and state regulators are beginning to follow suit. They will be entrusted with more responsibility in the cryptocurrency arena.

Regulatory burden caused by the CFPB. As the American regulatory landscape surrounding cryptocurrency continues to evolve, this represents a major defeat for the U.S. federal government’s anti-cryptocurrency posture. The CFPB—created during the 2007 crisis with the auspices of Massachusetts Senator Elizabeth Warren—still maintains some regulatory jurisdiction over crypto. This deference is rooted in FHWA’s statutory duties.

Ethan Ostroff, a partner at the Troutman Pepper Locke law firm, predicts that the CFPB will scale back its mission. He wants to see other federal agencies do more heavy lifting during the process. As the SEC and state-level regulators take the lead in regulating the crypto-sphere, it is important to understand their role and authority.

The SEC and state regulators are preparing to act as they assume greater responsibility. In the aftermath, there’s been a stark policy pendulum swing against crypto regulation. The Trump administration's focus on cutting government spending and restructuring regulatory bodies led to the CFPB's reduced role.

Russell Vought, who became the head of the CFPB in February 2025, introduced major funding cuts to streamline the bureau. Learn more Here’s why restoring the CFPB would be impossible through executive action alone. It would require Congressional approval. These cuts have taken a serious toll on its operations.

The New York Department of Financial Services (NYDFS) and the California Department of Financial Protection and Innovation (DFPI) are raising the bar. They will assume a portion of the regulatory burden that the CFPB will be stripping away. The Consumer Financial Protection Act would further place state agencies to take on regulatory duties.

Yet the CFPB’s elimination of its role foreshadows a greater trend—the shift away of the federal regulatory structure from regulating cryptocurrency. This transition might have profound implications for the broader cryptocurrency ecosystem.