This periodic bulletin highlights key legal developments governing blockchain technology, smart contracts, and digital assets, with a focus on financial services applications.
Digital Asset Classification
Digital assets are categorized by traditional asset type or function:
- Securities
- Virtual currencies
- Commodities
- Deposits, accounts, and intangibles
- Negotiable instruments
- Electronic chattel paper
- Digitized assets
Key Insights
SEC Guidance on Stablecoins
The SEC’s Division of Corporation Finance clarified that USD-linked stablecoins redeemable at par are not securities under federal law. This non-binding guidance, issued April 4, 2025, applies to "Covered Stablecoins" and signals regulatory clarity for issuers.
Crypto Asset Market Disclosures
On April 10, 2025, the SEC staff emphasized compliance with Regulation S-K for crypto asset securities offerings, focusing on transparency in filings related to:
- Risk factors
- Business models
- Management discussions
Regulatory Developments
Federal Actions
- DOJ Policy Shift: The DOJ disbanded its National Cryptocurrency Enforcement Team, refocusing on fraud (e.g., exchange hacks, scams) rather than broad "regulation by prosecution."
- FDIC Update: Banks may engage in crypto activities (e.g., custody, stablecoin reserves) without prior approval, provided risks are managed.
- CFTC: Withdrew advisories imposing extra burdens on crypto derivatives listings, citing market maturity.
State-Level Progress
- Kentucky: Enacted HB 701, protecting digital asset mining and node operations from restrictive zoning.
- California: Proposed Digital Financial Assets Law (DFAL) regulations, exempting crypto transactions from state money transmission rules.
Industry Trends
- Kraken x Mastercard: Launched a crypto debit card for spending digital assets at 150M+ merchants.
- PwC Report: Global crypto regulation is evolving, with jurisdictions like Hong Kong and the EU leading frameworks for VATPs (Virtual Asset Trading Platforms).
Enforcement Highlights
- Ripple Labs: SEC agreed to drop its appeal against Ripple’s retail XRP sales ruling, reducing penalties by 60%.
- FBI Seizures: Recovered $8M from a Kansas pig-butchering scam involving a bank CEO.
International Spotlight
- Hong Kong: SFC issued staking guidelines for VATPs, requiring risk disclosures and asset safeguards.
- EU: Advancing Digital Operational Resilience Act (DORA) for crypto service providers.
FAQs
Q: Are stablecoins considered securities?
A: The SEC’s April 2025 guidance exempts USD-linked, redeemable stablecoins from securities classification.
Q: Can U.S. banks offer crypto services?
A: Yes, under updated FDIC rules, banks may engage in activities like custody and stablecoin reserves without prior approval.
Q: What’s the latest in crypto taxation?
A: The IRS rescinded its DeFi broker rule, easing reporting burdens for decentralized platforms.