Cryptocurrency has moved from the fringes of tech to a mainstream asset class, but that shift to greater acceptance has brought with it more scrutiny from regulators. Whether that’s the pursuit of financial crime or the desire to reduce tax evasion, it means that cryptocurrency users face increasing regulation at both the state and federal level.

Regulators are working hard to make sense of the complex crypto market, with many different stakeholders and a range of activities that span banking, securities, commodities, payments, and more. As a result, the regulatory landscape for crypto is highly fragmented.

In the US, there has been a patchwork of state and federal regulations, with each taking their turn in addressing specific areas of the market. This has made it difficult for businesses to know what to expect and how to plan for compliance.

For example, New York was a leader in developing a framework to regulate the sector in 2015. The BitLicense requires any business that wants to mediate buying and selling of crypto, store or offer custody, operate a crypto exchange and more to obtain this license. In contrast, other states have taken a more negative stance toward the industry.

One big reason for these differences in approach is that cryptocurrencies are not the same as traditional assets. They are essentially codes that can be stored and traded electronically. They often have a volatile price and are unbacked by any financial collateral, leaving them susceptible to both cyber and operational risks. The digital life cycle of these assets amplifies the kinds of risks that are typically outside the realm of mainstream financial regulation, and regulators struggle to keep pace with this rapidly developing field.

The different approaches to regulation can also reflect the differing goals of various agencies. The FBI, for instance, was initially skeptical of Bitcoin’s anonymity and worked to prosecute the notorious dark web marketplace Silk Road in 2015, which used the platform to sell drugs, forged documents, ransomware and other illegal goods and services. Meanwhile, FinCEN is focused on money laundering and terrorism financing, and has begun to treat cryptocurrencies as a form of money.

At the state level, regulatory bodies have to balance these competing interests and try to come up with a coherent policy that protects consumers and prevents fraud without choking innovation. That’s why many states have begun to address the issue of cryptocurrency regulation at the state level, introducing bills like those proposed by New Jersey Senator Joseph S. Corti to bring the same consumer protection and investor safeguards that are applied to other forms of investment to cryptocurrency. It is important that these measures are introduced soon, as the crypto market continues to grow and evolve at a breakneck pace. And with a number of major cryptocurrency hacks in the news, it is only a matter of time before the public demands more regulatory certainty.