Using Cryptocurrency in Legal Contracts: 2025 Guide

When businesses start talking about paying in Bitcoin or issuing tokens as part of a merger, the first question is: how do you write a contract that actually works? In 2025 the United States finally gave us a clearer rulebook, but the landscape is still shifting. This guide walks you through the core legal building blocks, shows where the biggest risks hide, and gives you ready‑to‑use clauses you can drop into any agreement.

What the Law Says About Crypto Assets

Cryptocurrency in Legal Contracts is a rapidly evolving practice area that sits at the intersection of contract law, securities regulation, and commodity rules. The centerpiece of today’s framework is the CLARITY Act, passed by Congress in July 2025. The Act splits digital assets into three distinct categories:

• Digital commodities - assets that derive their value from the underlying blockchain and are overseen by the CFTC.
• Investment contract assets - tokens sold under an investment‑contract model, falling under SEC jurisdiction.
• Permitted payment stablecoins - regulated like traditional money, supervised by banking regulators under the GENIUS Act.

Each classification triggers a different set of compliance obligations, which in turn shape the language you’ll need in a contract.

Key Entities You’ll Meet in a Crypto Contract

Beyond the three asset classes, five other entities pop up in almost every agreement:

• SEC - enforces anti‑fraud rules for investment contract assets.
• CFTC - polices digital commodities and requires registration for intermediaries.
• Smart contracts - self‑executing code that can replace or augment traditional contractual clauses.
• AML/CFT obligations - broadly applied under the Bank Secrecy Act and FinCEN guidance.
• BitLicense - New York’s specific licensing regime that adds extra compliance layers for any crypto activity in the state.

Drafting Essentials: Clauses That Matter

Below are the nine clauses you should consider for any agreement that involves crypto assets. We’ve added brief rationales so you understand why each piece matters under the new regulatory framework.

1. Asset Definition Clause - Explicitly state whether the token is a digital commodity, investment contract asset, or permitted stablecoin. This determines which regulator’s rules apply.
2. Regulatory Compliance Clause - Require the counter‑party to certify compliance with the relevant agency (SEC, CFTC, or banking regulators) and to maintain any required registrations.
3. Anti‑Money Laundering (AML) Clause - Mandate an AML program that meets FinCEN standards, including transaction monitoring and record‑keeping.
4. Custody and Security Clause - Define who holds the private keys, whether third‑party custodians must be CFTC‑registered or SEC‑registered entities, and outline insurance requirements.
5. Smart Contract Integration Clause - If using on‑chain code, specify the code hash, version, and the mechanism for updating or terminating the smart contract.
6. Valuation and Pricing Clause - Tie the token’s value to a reliable index (e.g., CoinGecko) and address price volatility with a swing‑price or valuation lock‑in period.
7. Tax Withholding Clause - Require parties to withhold applicable taxes and provide Form 1099‑K or 1099‑B reports as needed.
8. Force‑Majeure / Regulatory Change Clause - Allow renegotiation or termination if a new law (for example, a future amendment to the CLARITY Act) materially changes the regulatory landscape.
9. Dispute Resolution Clause - Choose a venue and specify whether arbitration will consider on‑chain evidence, and whether a court can enforce smart‑contract outcomes.

These clauses cover the most common regulatory pain points and give you a template you can adapt to your specific transaction.

Comparison of the Three Asset Classes

Practical Tips for Different Scenarios

Scenario 1 - Cross‑border payment using a stablecoin: Use a permitted payment stablecoin clause, reference the GENIUS Act, and add an AML/KYC clause that satisfies both U.S. FinCEN and the recipient country’s AML regulator.

Scenario 2 - Token sale for venture funding: Classify the token as an investment contract asset, include a securities registration representation, and set up a lock‑up period to avoid immediate re‑classification as a digital commodity.

Scenario 3 - Decentralized finance (DeFi) protocol partnership: Draft a smart‑contract integration clause that defines the code hash, versioning, and upgrade process. Also, embed a force‑majeure clause for any future SEC‑CFTC coordinated rule changes.

Common Pitfalls and How to Avoid Them

• Assuming “crypto” means the same thing everywhere - The CLARITY Act’s three‑tier system makes a huge difference. Always ask the client which tier their token belongs to.
• Skipping AML compliance because the token is “decentralized” - FinCEN treats many decentralized platforms as Money Services Businesses. Include a compliance clause regardless of perceived decentralization.
• Ignoring state‑level licensing - If any part of the transaction occurs in New York, BitLicense compliance is mandatory, even if the token is a digital commodity.
• Relying solely on smart contract code for enforcement - Courts still look for traditional contract language. Pair on‑chain logic with off‑chain clauses.

Next Steps: From Draft to Execution

1. Identify the token’s classification under the CLARITY Act.
2. Choose the appropriate regulatory compliance representations.
3. Plug the relevant clauses from the checklist into your agreement.
4. Run the draft past a lawyer experienced in SEC/CFTC coordination and state licensing.
5. Implement an AML program and secure custodial arrangements before the signing date.

Following these steps reduces the risk of a regulator stepping in after the fact, and gives your counterpart confidence that the contract is enforceable.