Actually, in 1862, US cavalry and volunteer cavalry units were authorized to carry Stars and Stripes guidons, and most of them indeed did. They also had the blue regimental colors with the national Coat of Arms. A number of these flags still exist in various collections.
This was rescinded after the war and not reinstated intil much later. Why this was the case I still cannot figure out.
The artillery were the first to carry Stars and Stripes flags - the 1830's - the infantry got them in the 1840's before the Mexican War.
With this, what had been the old National flag (blue with national Coat of Arms on it) became the regimental flag - and the old buff color regimental flags were retired.