Cryptocurrency Contracts: Legal Guide to Using Crypto in Agreements (2025)

Quick Takeaways

• Identify which of the three asset classes - digital commodity, investment contract asset, or permitted payment stablecoin - your crypto falls under.
• Follow the CLARITY Act’s split oversight: CFTC for digital commodities, SEC for investment contract assets, and banking regulators for stablecoins.
• Include explicit definition, valuation, settlement, AML, and jurisdiction clauses in every cryptocurrency contracts to reduce uncertainty.
• Beware of volatility, tax treatment, and state‑level licensing like New York’s BitLicense when drafting cross‑border deals.
• Use the comparison table below to match asset type with the most relevant regulatory checklist.

Businesses are eager to pay suppliers, raise capital, or reward employees with crypto, but the legal side often lags behind. With the United States rolling out the CLARITY Act and the GENIUS Act in 2025, the regulatory picture is finally clearer - yet still complex enough to trip up anyone who skips the fine‑print. This guide walks you through the essential steps to embed crypto into traditional agreements without landing in a regulatory minefield.

What "Cryptocurrency" Actually Means in a Contract

Cryptocurrency is a digital asset that uses cryptographic techniques to secure transactions and control the creation of new units. While the term is generic, courts and agencies now treat different tokens as distinct legal categories. Knowing which bucket your token belongs to determines which agency’s rules you must follow.

Breaking Down the Three Asset Classes

Digital Commodity is defined as a token whose value comes directly from the underlying blockchain’s functionality, excluding securities, derivatives, and stablecoins. Think of Bitcoin or Ethereum’s native token - they power the network and are traded for cash or other crypto.

Investment Contract Asset refers to a digital commodity that was initially sold as an investment contract and can be transferred peer‑to‑peer without an intermediary. Examples include certain token sales that promised future profits or governance rights.

Permitted Payment Stablecoin is a token pegged to a fiat currency and approved under the GENIUS Act; issuers must be supervised by banking regulators. USDC and Tether (when used as a payment vehicle) fall here.

The 2025 Regulatory Landscape

The CLARITY Act (H.R.3633) creates a three‑tier framework and assigns jurisdiction accordingly. It was signed into law in July2025 and is the backbone of every crypto‑related clause you’ll draft.

The Securities and Exchange Commission (SEC) retains exclusive authority over the issuance of investment contract assets, requiring registration, reporting, and anti‑fraud enforcement. If your token was sold in a private‑placement that meets the Howey test, the SEC’s rules apply.

The Commodity Futures Trading Commission (CFTC) governs digital commodities, policing fraud, manipulation, and requiring platform registration for intermediaries. Any spot‑trade of Bitcoin or Ether triggers CFTC oversight.

For stablecoins, the BitLicense - New York’s 2015 licensing regime - still applies to entities conducting virtual currency business in the state, imposing capital, AML, and consumer‑protection standards. While not a federal rule, it’s the most stringent state framework and often influences contract language nationwide.

Core Clauses Every Crypto‑Enabled Agreement Needs

1. Definition Clause: Clearly spell out the token name, ticker, contract address, and asset class (digital commodity, investment contract asset, or stablecoin). Example: “‘USDC’ means the USD‑backed stablecoin issued by Circle, classified as a Permitted Payment Stablecoin under the GENIUS Act.”
2. Payment Method Clause: State whether payment will be made in crypto, fiat, or a hybrid. Include the blockchain network, wallet address format, and any required confirmations (e.g., 3‑block finality).
3. Valuation & Pricing Clause: Because crypto prices swing wildly, specify the pricing source (e.g., CoinGecko, Bloomberg) and the exact time‑stamp (e.g., “price at 12:00UTC on the settlement date”). Consider a price‑floor or price‑cap to manage risk.
4. Settlement & Transfer Clause: Detail the mechanics - who pays the gas fees, the method of token transfer, and what constitutes a successful settlement (e.g., transaction confirmed on-chain and recorded on both parties’ ledgers).
5. Representations & Warranties: Both parties should attest that they hold any necessary licenses (e.g., BitLicense, CFTC registration) and are not breaching AML or sanctions rules.
6. Regulatory Compliance Clause: Reference the CLARITY Act and specify which regulator applies. Include an obligation to notify the other party of any regulatory change that could affect performance.
7. Dispute Resolution Clause: Choose a forum (U.S. District Court, arbitration under the ICC, or on‑chain arbitration mechanisms). If using on‑chain arbitration, reference the smart‑contract code version.
8. Force Majeure / Technical Failure Clause: Identify blockchain outages, network forks, or exchange shutdowns as potential force‑majeure events, and outline remedies (e.g., extension of time).

Practical Drafting Tips & Common Pitfalls

• Volatility Management: Use price‑oracles with a fail‑over mechanism. Avoid locking in a single price feed for more than 24hours.
• Tax Implications: The IRS treats crypto as property; any transfer can trigger a taxable event. Include a clause stating each party bears its own tax liability.
• Jurisdiction Considerations: If the contract involves parties in multiple states, note which state’s “BitLicense” requirements apply and whether the contract will be governed by New York law or the parties’ chosen law.
• AML & CFT Obligations: Incorporate the FinCEN definition of a “Money Services Business” and require KYC documentation for crypto wallets above a threshold (e.g., $10,000).
• Record‑Keeping: Preserve on‑chain transaction hashes, off‑chain invoices, and any signed amendments for at least five years to satisfy SEC/CFTC audit demands.
• Smart‑Contract Interaction: If you rely on automated execution, embed a reference to the exact contract address, version hash, and an audit report from a reputable firm.

Asset‑Class Comparison Table

Sample Definition Clause (HTML Example)

Below is a ready‑to‑paste snippet you can adapt for most agreements involving a stablecoin.

<span itemscope itemtype="https://schema.org/Thing">
  <span itemprop="name"><strong>USDC</strong></span> means the USD‑backed stablecoin issued by Circle Internet Financial Ltd.,
  classified as a <span itemprop="description">Permitted Payment Stablecoin</span> under the GENIUS Act,
  with a 1‑to‑1 redemption ratio to U.S. dollars held in FDIC‑insured accounts.
</span>

Notice how the definition includes the token’s ticker, issuer, asset class, and regulatory reference - all elements the SEC and CFTC look for when evaluating contract enforceability.

Next Steps for Practitioners

• Map each token you intend to use to one of the three CLARITY Act categories.
• Run a compliance checklist (license, AML, tax) before you lock in any price or deadline.
• Choose a reliable price oracle and embed its API endpoint in the contract language.
• Include a clause that obliges the counter‑party to provide proof of registration (e.g., CFTC ID, SEC FormD).
• Consult with a qualified securities attorney to verify that your representation clauses meet the latest SEC guidance.