Detailed breakdowns of these developments, their implications for businesses going forward and a few other updates on crypto-law topics are discussed below.

Mike Selig Nominated for CFTC Chair: October 25, 2025

Background: Mike Selig has been nominated for CFTC Chair. Most recently, Selig has been the Chief Counsel of the SEC Crypto Task Force. The nomination comes after the nomination of Brian Quintenz was pulled, reportedly due to complaints by certain leaders in the crypto ecosystem.

Analysis: This about as pro-crypto as a nominee could have been. It will be interesting to see the direction he takes the CFTC, particularly in the absence of comprehensive market structure regulation. Unlike Quintenz’s nomination that was repeatedly delayed, the Senate Agriculture Committee moved quickly to set a confirmation hearing.

SEC Chair Teases Taxonomy: November 12, 2025

Background: SEC Chair Atkins gave a landmark speech that seems to be breaking the ground for a more comprehensive overhaul of how securities laws apply to digital assets. First, he clarified the rather commonsense notion that something that was once the subject of an investment contract – orange groves, beavers or cattle embryos to name a few – can cease to be subject to an investment contract as circumstances change. Second, he proposed a taxonomy for digital assets that would be divided into (1) digital commodities (or network tokens) that derive their value from the operation of a crypto platform or network, (2) digital collectibles that represent or convey rights in things, (3) digital tools that perform a function such as verifying identity and (4) tokenized securities, which would be securities. Only the last category would be regulated by the SEC. Third, he laid out what the SEC’s expected approach would be to digital asset regulations.

Analysis: While this is significant progress, it still leaves open a number of major questions that hopefully will be answered in the upcoming months and years. Does the SEC believe a token itself can inherently be or not be a security, rather than being a piece of code that may or may not be associated with a set of rights? Will the agency continue with the “embodiment theory” of tokens that seemed to have been largely rejected by the courts in the later stages of the SEC’s earlier crusade against participants in the digital assets ecosystem? Should there be broad buckets of asset classes where people are developing instruments utilizing new technologies that defy classification? If a tokenized security is just a thing that would have been a security if not tokenized and we’re still relying on the Howey test, have we necessarily moved beyond the morass in large part created by the SEC of the prior six years? This contrasts somewhat with our own proposal submitted on behalf of The Digital Chamber that proposed much narrower categories and a somewhat more fluid approach, though a lot of the principles still align.   

Briefly Noted:

Government Back Up and Running: After 43 days, the federal government got its act together for just long enough to end the longest government shutdown in US history. Most regulatory agencies were operating on a skeleton crew, so this also means agencies developed a backlog on normal procedures to get government approvals or reviews for things like registration statements. The SEC came out with this handy dandy FAQ on how to handle certain things that did or didn’t move forward during the shutdown. 

SEC Releases Exam Priorities: The SEC’s Division of Examinations, which examines broker-dealers, investment advisers and certain other registered intermediaries, released its annual list of exam priorities. For the first time since the Hinman Speech, digital assets are not one of the enumerated exam priorities, although there is a more general priority regarding the use of emerging financial technologies.

IRS Releases Staking Guidance for ETFs: A new revenue procedure released by the IRS established a safe harbor for “investment trusts” and “grantor trusts” under tax law to be able to stake cryptoassets without jeopardizing their special tax status. 

Market Structure Keeps Moving: The Senate Agriculture Committee released a discussion draft that included a lot of placeholders, including an entire “seeking further feedback” section for decentralized finance. The Brookings Institute proposed a merger of the SEC and CFTC to best regulate crypto. Nothing has moved on the House side with respect to the Clarity Act that it passed that does not closely resemble the discussion drafts coming out of the Senate. While Sen. Tim Scott has stated they’re targeting a vote on a market structure bill before the end of the year, it’s hard to see how this would come together so quickly when lawmakers appear to still be so far apart. 

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.

We also note — with both pride and sadness — that Jonathan Schmalfeld has left Polsinelli and his role on the BitBlog team to become Head of Policy at the Digital Chamber.

Important OCC and Fed Remarks on Stablecoin Oversight – Don’t Expect Shocks

Background: Acting Comptroller Jonathan Gould told the American Bankers Association convention in Charlotte that regulators do not expect interest-earning stablecoins to trigger a sudden drain on bank deposits, emphasizing that any shift would be gradual and closely monitored. He added that if deposit flight ever rose to a “safety and soundness” concern, banking agencies would respond. His comments followed those of Federal Reserve Vice Chair Michael Barr, who recently urged Congress to close remaining “gaps” in the pending stablecoin legislation to ensure consistent reserve and supervisory standards.

Analysis: Read together, Barr’s and Gould’s remarks make clear that while regulators welcome the GENIUS Act as a starting framework, they remain focused on the areas it leaves open — including uneven reserve quality, state-federal chartering inconsistencies and the risk of synthetic-yield structures. Both comments suggest an intent to tighten standards through implementation rather than expand market flexibility. In practice, that means stablecoin issuance and custody are likely to be treated increasingly like traditional bank activities — subject to consolidated oversight, capital and liquidity requirements and limits on where and how yield can be offered — effectively pulling the activity further inside the prudential perimeter rather than leaving it to fintech-style experimentation. Gould’s emphasis on allowing smaller banks to participate is notable, but the broader message is that stablecoin operations will face the same discipline expected of insured depository institutions.

Fordham Blockchain Conference: Full House, Even Without Regulators

The Fordham Blockchain Conference once again drew a packed audience of lawyers, policymakers and industry participants. Even without most federal regulators and commissioners — many of whom were grounded by the shutdown — the conference delivered meaningful discussion and debate among many of the leading lawyers and firms in the space.

Special thanks to Professor Donna Redel (Fordham), Greg Xethalis (Multicoin Capital) and Joyce Lai for organizing another thoughtful program. Joyce was absent this year for the best of reasons: welcoming baby Selene, the newest member of the blockchain community.

SEC Chair Paul Atkins attended and spoke, showing the depth of his personal commitment to the space. His participation during a week when most of Washington was shut down underscored how invested he remains in the sector’s development.

Jonathan Schmalfeld Joins the Digital Chamber as Head of Policy

We also mark an important transition for the BitBlog team. Jonathan Schmalfeld, our longtime contributor and lead writer, has taken on a new role as Head of Policy at the Digital Chamber, the leading blockchain and digital-asset advocacy organization. Jonathan’s analytical approach and ability to connect policy to practice helped define the BitBlog’s voice. While we’ll miss him on these pages, we look forward to collaborating with him in his new capacity.

Briefly Noted

• Global regulators raise concerns. Both the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) issued reports this month warning that uneven national implementation of crypto-asset and stablecoin frameworks is creating regulatory fragmentation and potential systemic risks. The FSB’s peer review identified “significant gaps and inconsistencies” across jurisdictions, while IOSCO reiterated its call for global convergence under the “same activity, same risk, same regulation” principle. Together, the statements reinforce that international coordination remains a top supervisory priority as crypto activities increasingly intersect with traditional markets.
  (Read the FSB statement | Read the IOSCO release)
• Capital-markets activity continues. A major crypto exchange announced plans to go public via a $1 billion SPAC, reflecting continuing investor appetite despite the lack of U.S. market-structure legislation.
• Corporate treasury adoption grows. It has been reported that Newsmax plans to create a corporate crypto reserve composed of Bitcoin and “Trump Coin,” continuing the trend of non-financial companies allocating to digital assets — albeit with a distinctly political twist.

Conclusion

With Washington largely shut down, the pace of formal rulemaking has slowed, but the underlying policy work has not. The GENIUS Act’s implementation phase is now where the real battles over scope, supervision and access will play out. For the moment, progress in digital assets looks less like forward motion and more like quiet positioning — agencies drafting, industry waiting and everyone trying to read what comes next.

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.

Detailed breakdowns of these developments, their implications for businesses going forward, and a few other updates on crypto-law topics are discussed below.

SEC and CFTC Hold Joint Roundtable Discussions on Regulatory Harmonization Efforts: Sept. 29, 2025

Background: The SEC and CFTC held a series of roundtable discussions between various financial industry representatives to discuss how to encourage coordination between the agencies, especially regarding innovative products and services like those enabled through blockchain technologies. The Commissioners’ various statements (including by SEC Chair Atkins, CFTC Acting-Chair Pham, SEC Commissioner Peirce, and SEC Commissioner Uyeda) all emphasized a need to put regulatory missions over regulatory turf wars to ease compliance obligations on market participants and better serve the public. Despite the lack of permanent leadership at the CFTC and market structure legislation, these agencies are moving forward, consistent with the advice of the President’s Working Group Report from July of this year.

Analysis: This was one of the more productive conversations from these roundtables, as the old guard and new guard were often on panels together to discuss possible approaches for the agencies to address new technologies without building regulatory barricades. Views on exemptions and regulatory sandboxes seemed largely dictated by whether the speaker represented an old-guard institution (largely anti-exemptions) or a new entry (largely pro-exemptions). Also, it is worth noting the humor of Commissioner Peirce’s speech, including the line: “[f]or sports-related complaints, please call the CFTC.” The line was both hilarious and apt for the crowd, which included predictive market CEOs who are currently fighting with regulators on whether sports prediction markets should be governed by the CFTC, state gaming regulators or both.

SEC Issues DePIN Token No-Action Relief: Sept. 29, 2025

Background: The SEC has issued No-Action relief to decentralized physical infrastructure (DePIN) developer DoubleZero regarding the planned distribution and use cases for a planned “2Z” token. This is the first formal No-Action relief given to a digital asset project since the IMVU No-Action Letter from late 2020. While not binding for any other project, this gives a framework for what the SEC currently considers to be outside of the scope of federal securities laws with respect to the distribution of tokens in a DePIN project. Importantly, it was noted that “2Z is specifically designed to exclude any passive value accrual mechanisms—it does not incorporate dividends, a deflationary token supply, programmatic buybacks, or any similar functionality.”  

Analysis: The requested/granted relief is limited to “Programmatic Transfers” of 2Z to “Network Providers” and “Resource Providers” as compensation for their own services, not prior transactions or speculative sales (which did occur, but under securities laws exemptions). So, this isn’t a far leap, as it is seemingly affirming other informal guidance that the mere existence of transferability or a secondary/speculative market doesn’t make a token itself a security. But the inbound letter does partially rely on a consumptive use/utility argument a la United Housing v. Forman, which had largely been rejected by courts in prior token cases like LBRY. This was a huge effort by both agency staff and the project’s team and lawyers to get this done, and shows a real willingness at the current SEC to understand the underlying technology and provide guidance consistent with that technology, which is great to see.

Senate Democrats Release Market Structure Framework: Sept. 19, 2025

Background: Senate Democrats have responded to the Senate Banking Committee majority’s revised market structure bill with their own set of policies and framework that the minority will seek to have addressed in any eventual final legislation. There is a plan to have a market structure legislation markup in Senate Banking by the end of October or early November, so that leaves very little time for Senate Democrats to vet language proposals with industry participants before seeking changes to the existing market structure draft. That said, the Senate Agriculture Committee (which has oversight authority over the CFTC) still hasn’t released their companion bill, and nothing will be finalized until that is done as well.

Analysis: It appears that Senate Democrats are not far away from Senate Republicans on most issues, making passage of a market structure bill in the Senate more likely, although some sticking points remain. These include whether there should be state law preemption; the level of government oversight over decentralized finance software; and adding additional prohibitions against stablecoin treasury yields being passed to consumers. Even if the Senate ultimately can pass a market structure bill, it appears there will still be huge differences between the Senate’s vision of market structure and the CLARITY Act market structure bill that already passed in the House.    

SEC Approves Rule Proposal for Generic Listing Standards for ETFs: Sept. 17, 2025

Background: The SEC has granted requests for accelerated approval of certain proposed rule changes that would make it easier to list Commodity-Based Trust Shares without needing to apply for proposed rule changes with the SEC each time. This approval is significant for crypto, as there are dozens of crypto ETFs awaiting the SEC’s sign-off, and this approval will accelerate that process both for pending applications and similar applications going forward. There is expected to be a wave of spot crypto ETF launches in the coming weeks and months as a result of this move from the SEC.

Analysis: This topic was one of the various topics included in Commissioner Peirce’s Feb. 21, 2025, statement soliciting public input on regulatory issues related to blockchain technology and crypto assets. The Digital Chamber (including follow-up comments specific to the proposal) and many others submitted comments on those ETF topics, so it’s great to see that advocacy work in action and getting results. The SEC also approved trading for a fund that holds five cryptocurrencies last week. Next up would be allowing staking in those products or allowing ETFs to hold liquid staking tokens, which would effectively do the same thing.

Briefly Noted:

Strategic Bitcoin Reserve Bill: The BITCOIN Act, which would enable budget-neutral ways for the U.S. government to buy Bitcoin, got some momentum, as industry leaders went to D.C. to advocate for it. If this is an important issue to you, the Digital Chamber has set up an easy way to contact your representatives and let them know.

Request for Comment on GENIUS Act: Department of Treasury has issued an advance notice of proposed rulemaking, seeking comments on the implementation of the GENIUS Act. Good to see them moving forward here, but there is a lot of work to be done on getting the GENIUS Act fully implemented.

CFTC Chair Kerfuffle: Brian Quintenz, who was initially nominated by President Trump to be the next chair of the CFTC, but who has had his confirmation hearing continuously postponed, publicly released a series of messages of why he believes his confirmation has been so delayed. His nomination has since been formally retracted. There is still not a confirmed CFTC Chair, or even a quorum of commissioners, and this power void is not expected to be filled soon. With initiatives like allowing stablecoin collateral for derivatives traders moving forward, eventually, this power vacuum will reach a breaking point.

Commissioner Peirce Statement: Commissioner Peirce gave a statement titled, “Bees, Ts, and NFTs: Remarks at the Coin Center Dinner,” which is a must-read if only for its uniqueness. I personally took to heart the ending, though: “I especially appreciate the members of the crypto community who put their noses to the grindstone to serve other people—even when doing so requires them to take career, financial, legal, and reputational risk.”

SEC Chair Speech Further Advocates “Super-App”: SEC Chair Atkins gave a keynote address in which he further stated his intention to drive the agency to remove barriers from onchain trading of securities, stating: “We must allow for ‘super-app’ trading platform innovation that increases choice for market participants. Platforms should be able to offer trading, lending, and staking under a single regulatory umbrella.” Great stuff to make it a less fractured system for financial products.

Prediction Markets Article: This article, Unanswered Questions Surrounding Prediction Markets, is something worth reading for everybody in the space. Kalshi and Polymarket have a combined $17.5 billion of volume in 2025 so far, and they haven’t even hit the mainstream yet.

Crypto Companies Go Public: Both Gemini and Figure had seemingly successful IPOs recently, with the price of shares for both companies exceeding prior estimates. Additionally, nine crypto startups raised over $869 million in just one week in September, and companies are on pace to reach $25 billion in venture funding before end of year. So, both the private and public markets remain hot in crypto.

Conclusion:

Taken together, these developments underscore how quickly the digital-asset landscape can shift even when Congress is consumed by unrelated fiscal debates. Senate Democrats’ market-structure proposals, the SEC’s fast-tracked ETF standards, and the ongoing CFTC leadership gap each introduce new opportunities and risks that market participants will need to monitor closely. With agency initiatives advancing in tandem with legislative efforts and crypto companies successfully entering the public markets, the coming months will likely define how the next phase of U.S. crypto regulation and market integration unfolds.

Detailed breakdowns of these developments, their implications for businesses going forward, and a few other updates on crypto-law topics are discussed below.

Senate Releases Market Structure Draft Bill: September 5, 2025

Background: Before the August recess, the Senate Banking Committee released a discussion draft market structure bill with an accompanying request for comments. Polsinelli assisted with the Digital Chamber’s response to those comment requests. Back from break, the Senate has now taken in those comments and released an updated draft titled the Responsible Financial Innovation Act. Senate Banking Chair Tim Scott will try to advance this draft through committee this month to stay on the fast-paced schedule that congressional and executive branch leadership is aiming for. While still waiting for the Senate Agriculture Committee’s companion draft to address many CFTC-related issues, Senate Banking will need to schedule a hearing in the near future on this revised draft for any chance of passing in 2025.

Analysis: The big question was whether the Senate’s bill would revert to the CLARITY Act’s control-based/decentralization test (which passed the House in an overwhelming vote of 294-134) to determine if sales of certain digital assets would be considered securities transactions, versus the Senate’s bill, which created an “ancillary asset” concept to determine when a transaction involving digital assets constitutes a securities transaction. That question was answered, as the current draft maintains the ancillary asset framework with some fairly important changes. The biggest industry win in the revised draft has to be the increased protection for developers of noncustodial software tech, which was advocated for by more than 100 industry participants and spearheaded by the DeFi Education Fund. From an initial review, it appears that the draft implemented many of the modifications requested by industry comments — but at 182 pages, it is expected to have areas that still need improvement.

SEC and CFTC Release Joint Statements on Crypto Issues: September 2-5, 2025

Background: The SEC and CFTC released a joint statement clarifying the views of both agencies’ staff that “SEC- and CFTC- registered exchanges are not prohibited from facilitating the trading of certain spot commodity products.” One large hold-up in facilitating the sale of tokenized securities through existing digital asset exchanges (or facilitating the sale of non-securities crypto assets through alternative trading systems and securities exchanges) is how the exchanges would be permitted to sell, or accept as payments, non-securities like $USDC or $BTC alongside tokenized securities. This appears to be the first step in overcoming that hurdle. A few days later, CFTC Acting Chair Pham and SEC Chair Atkins released a joint statement with the subtitle, “Next Steps – Bringing Novel and Innovative Products Back to America,” which relates to planned convergences of securities and commodities laws that might facilitate the development of “everything exchanges.”

Analysis: While the statements don’t create any new actionable law, they do signal the direction in which the agencies will be heading. The follow-up statements on bringing novel financial products back onshore were also important. All the listed areas of focus — 24/7 markets, perps, event contracts, DeFi and portfolio composition requirements — directly implicate crypto or benefit from blockchain ledger technology rails, so it seems like good things are on the horizon. It also means the policy work done in the next 12-18 months could shape U.S. financial markets for decades to come.

SEC Releases Regulatory Agenda: September 4, 2025

Background: The SEC’s Office of Information and Regulatory Affairs released the Spring 2025 Unified Agenda of Regulatory and Deregulatory Actions, which Chair Atkins described as covering “rule proposals related to the offer and sale of crypto assets to help clarify the regulatory framework for crypto assets and provide greater certainty to the market,” as well as “withdrawal of a host of items from the last Administration that do not align with the goal that regulation should be smart, effective and appropriately tailored within the confines of our statutory authority.”

Analysis: While the market structure legislation efforts are ongoing in the Senate, the SEC has clearly signaled that it intends to move forward with crypto-related rulemaking efforts without waiting on the outcomes of those legislative efforts. The proposed rule changes include many areas that can be expected to impact crypto (such as revised definition of “Dealer” and Rule 144 Safe Harbor changes) and five agenda items that directly mention crypto:

(1) Crypto Assets;
(2) Amendments to the Custody Rules;
(3) Transfer Agents;
(4) Amendments to Broker-Dealer Financial Responsibility and Recordkeeping and Reporting Rules; and
(5) Crypto Market Structure Amendments.

There is very little detail at this point, but it is a step in the right direction and a forecast of what is to come in the next 6-12 months. It is also interesting that, for the first time, this is being framed as a deregulatory agenda — not just a regulatory one.

Briefly Noted:

NASDAQ Submits Crypto Rule Change Proposal: The NASDAQ Exchange has submitted a proposed rule to the SEC regarding the tokenization of stock for trading on-chain. While the current proposal doesn’t include T+0 settlement, trading stocks through blockchain ledger technology could allow for faster settlement and easier books and records-keeping compliance, alleviating the need for burdensome consolidated audit trail rules.

Fed Conference on Payments Innovation: The Federal Reserve is hosting a conference on “payments innovation.” Less than a year ago, we were in the throes of Operation ChokePoint 2.0, and now the Fed is actively bringing together crypto leaders to figure out how to integrate blockchain into the financial system.  

Polymarket No-Action: Polymarket will be available to U.S. consumers after the CFTC issued a no-action letter that allows Polymarket to offer event contracts without reporting the data required under U.S. financial regulations (which wouldn’t have added much, given the level of transparency). This comes as prediction markets start to influence sports wagering markets with their rise in popularity.

Crypto Funding Stays Hot: Crypto companies have raised over $16 billion this year from venture, which is on pace to beat the funding record from 2021, when companies in the space raised over $29 billion. This comes as Figure and Gemini both are looking to go public in the near term and M&A in the space is hotter than ever.

100+ Industry Participants Push for Developer Protections: DeFi Education Fund organized a huge coalition of industry advocacy groups and participants to sign a letter advocating for protecting the software developers and non-custodial service providers. The Digital Chamber’s Consumer Innovation working group came up with draft legislative text for self-custodial wallet developers and consumers — which is a good start — and which was highlighted on pg. 30 of the Digital Chamber’s letter to the Senate Banking Committee on market structure legislation. As noted above, these efforts were seemingly successful in getting developer protections added to the Senate market structure bill efforts.

Why Stablecoins: Similar to the effort spearheaded by Polygon a few years ago of compiling real world uses cases for blockchain technologies, this recent effort to compile what makes stablecoins so useful is a nice addition to the zeitgeist.

Economic Data on the Blockchain: Commerce Secretary Lutnick went semi-viral recently when he said his department will start issuing economic data on blockchain (official release here). This will allow pricing oracles to rely on blockchain data versus publicized data, which can lag and have errors in reporting. This could have a large effect on how economic indicators get priced into the market.

White Hat Safe Harbors: In addition to the crypto privateer law proposals, more and more DeFi protocols are providing safe harbors to white-hat hackers in event of a breach or exploit. By the time authorities get involved, it is often too late, so giving private actors — who have the ability to stop these exploits while they are occurring — the power to do so is a good idea.

Conclusion:

The pace of developments underscores that the “crypto sprint” is more than just a slogan; lawmakers, regulators and industry participants are all moving quickly to shape the rules that will govern digital assets for years to come. With the Senate Banking Committee pressing forward on its market structure bill, the SEC and CFTC aligning on joint statements and rulemaking agendas and agencies across the government opening the door to blockchain-based innovation, the next several months will be decisive.

Whether the result is greater clarity, better protections for developers and consumers or a framework that helps keep innovation onshore, what happens in 2025 will set the trajectory for the U.S. digital asset ecosystem well into the next decade.

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.

Detailed breakdowns of these developments, their implications for businesses going forward and a few other updates on crypto-law topics are discussed below.

SEC Issues Guidance on Proof of Stake Liquid Staking Tokens: Aug. 5, 2025

Background: For the less crypto savvy, liquid staking tokens (LSTs) are tradable tokens received in exchange for staking cryptocurrency with a Proof-of-Stake (PoS) protocol. These tokens serve as receipts — representing staked assets plus accrued rewards — while allowing the holder of the tokens to use them in decentralized finance activities. This enables investors to earn staking rewards without fully locking up liquidity since the LST can be sold, lent or otherwise used while the original underlying staked asset remains locked in the network. The SEC’s Division of Corporation Finance has now released guidance on when it views “Liquid Staking Activities” as not involving the offer or sale of securities. Importantly, this guidance is limited and does not mean that all configurations of LST issuance and redemptions fall outside of the activities regulated by the SEC and state securities regulators.

Analysis: This statement follows prior guidance on Covered Stablecoins, Memecoins and Staking, and it continues the current SEC’s approach of issuing targeted regulatory guidance for digital asset activities, where previously Commissioners advocated for (and some continue to advocate for) ambiguity. Polsinelli specifically called for the Commission to address liquid staking tokens in our written submission to the SEC on behalf of the Digital Chamber (see, pg. 20), making this exactly the type of guidance that leading industry advocacy groups are actively seeking. One big takeaway is that the guidance only addresses “the staking of crypto assets that are intrinsically linked to the programmatic functioning of a public, permissionless network and are used to participate in and/or earned for participating in such network’s consensus mechanism or otherwise used to maintain and/or earned for maintaining the technological operation and security of such network.” Further, while the latest guidance specifically referenced the SEC’s prior staking guidance, this statement appears to have been carefully crafted to avoid explicitly limiting the guidance to only apply to PoS protocols. Given the already substantial LST market, this guidance is particularly important as crypto treasury companies expand and look for ways to earn yield on their token holdings.

DOJ v. Storm Privacy Preserving Technology Criminal Trial Ends: Aug. 6, 2025

Background: The trial in the DOJ’s criminal prosecution of Roman Storm, a developer of privacy preserving technology, lasted about three weeks. The DOJ’s case alleged Storm’s knowledge of criminals using the privacy tool he created (alongside noncriminal use) placed put him in a conspiracy with the criminals who used the technology. The case concluded with a verdict of guilty on the charge of conspiracy to operate an unlicensed money-transmitting business, but the jury deadlocked on the charges of conspiracy to commit money laundering and conspiracy to violate sanctions. The verdict came a week after closing statements — as jurors needed additional time to deliberate — but they were still ultimately  unable to reach a unanimous verdict in two of the three charges. This means the DOJ must now decide whether or not to request a new trial on those counts. The case echoes Bernstein v. United States, which was critical in articulating that the right to free speech includes the right to create and publish cryptographic technology, the backbone of online privacy today. Storm’s case could prove equally significant in defining individual rights to create “neutral” privacy-preserving software.

Analysis: The government’s case featured questionable evidence and witness complications. The first witness testified that a “recovery firm” told her that crypto that was stolen from her was sent through the Tornado Cash protocol. It was reported, however, that the “recovery firm” was actually under investigation by the FBI for fraud, and her stolen crypto likely never actually touched the protocol. There were also issues around witness availability: after it was reported that prosecutors were still considering charges against certain defense witnesses, those witnesses to pled the Fifth instead of testifying for the defense. The fact that the only charge for which Roman Storm was convicted — regarding failing to obtain a license — was for something FinCEN, which issues such licenses, directly told the DOJ a person doesn’t require a license for makes the issue seem ripe for appeal. This is far from over, as the sole conviction was also the most centered on legal vs. factual issues, and post-trial motions are expected, but the verdict itself was a mixed result with uncertain implications for the creation of non-custodial software generally. This also comes as the Department of Treasury is looking for comments on how to address illicit finance issues in digital assets.

Briefly Noted:

Public Markets Booming: While it may be ambivalent about the adoption of stablecoins and other cryptocurrencies, Wall Street seems to be clamoring for more public company activity in the space. In addition to the dozens of crypto treasury companies that have launched or are rumored to be launching and the successful IPO of stablecoin issuer Circle, Gemini publicly filed Form S-1 in advance of an IPO, and Bullish — the owner of an exchange that doesn’t even permit U.S. investors, along with other related businesses, including CoinDesk — significantly upsized its IPO, ultimately raising about $1.1 billion dollars. There has been great flexibility in the transaction structures of these vehicles, from traditional IPO to moving existing listings to the U.S., to de-SPAC transactions, to mergers into existing listed companies, to simply shifting the business strategy of an existing public company. Polsinelli has been advising investors and other stakeholders in all flavors of these transactions. 

Digital Chamber Releases Comments to Senate Working Draft: The Digital Chamber has submitted its response to the Senate Banking Committee’s digital asset market structure working draft questions. The Senate will have much to consider when they return from the August Congressional Recess.

Crypto Executive Orders: The President issued two Executive Orders related to crypto recently. The first mandates that the Secretary of Labor issue guidance for 401ks  that includes “alternative assets,” including crypto. The other is related: preventing a recurrence of Operation ChokePoint 2.0, which under the prior administration severely limited the banking opportunities of crypto industry participants by requiring federal banking regulators to create policies preventing de-banking based on political or industry affiliations.

White House Crypto Head Steps Down: Bo Hines is stepping down as the executive director of the White House crypto council to return to  the private sector. With the President’s Working Group on Digital Asset Markets having completed its report, this was likely a good time to hand off the reigns to others to continue these efforts.

Crypto Privacy Updates: In light of the Tornado Cash verdict, this article from Coinbase on privacy preserving technologies like zero-knowledge proofs, and this speech from SEC Commissioner Peirce on the importance of financial privacy preservation, provide compelling reasoning for the importance of preserving financial privacy in an increasingly digital world, as well as the struggles of doing so.

Uniswap DUNA Proposal: Uniswap proposed adopting a DUNA corporate wrapper for its existing token governance structure. The DUNA structure was introduced by Wyoming and created last year to attract crypto businesses. Seeing an extremely sophisticated team like Uniswap make this proposal and become one of the first major DAOs to contemplate a DUNA corporate structure is certainly something worth monitoring. That said, the structure is just one of many in the decentralization toolbox and still may not be appropriate for many DAOs and other protocols looking to decentralize, particularly in light of potential tax consequences and significant ambiguity within the DUNA law itself.

Do Kwon Pleads Guilty: Three years after the Terra/Luna collapse that contributed to the downfall a crash of 3AC and FTX, founder Do Kwon plead guilty to two counts of federal fraud. He faces up to 25 years in U.S. prison, after which he still may face extradition to South Korea — which engaged in a tug-of-war with U.S. authorities regarding his release from prison in Montenegro.

Conclusion:

Both the SEC’s liquid staking guidance and the mixed verdict in Storm’s trial reflect an inflection point for U.S. crypto regulation. Industry stakeholders now have greater clarity on certain staking activities, yet the line between permissible software development and unlawful facilitation of financial crime remains contested. With additional executive action from the White House, new market structure proposals from Congress and industry-led governance experiments such as Uniswap’s DUNA initiative, the legal and policy environment for digital assets is changing at an unprecedented pace.

How regulators, courts and industry participants navigate these developments in the coming months will shape not just compliance obligations, but also the broader trajectory of innovation in blockchain-based finance.

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.

In the past few weeks, SEC Chair Paul Atkins unveiled “Project Crypto,” a sweeping Commission-wide initiative to re-engineer the federal securities framework and enable a blockchain-embracing financial system. The announcement came the same week as the President’s digital asset working group released its own 166-page legislative and regulatory roadmap. While both efforts remain in their formative stages, they signal a potentially historic shift: a coordinated move away from legacy intermediated finance toward a more open, programmable, blockchain-embracing financial structure.

Detailed breakdowns on these major policy proposals, what they mean for businesses going forward and a few other updates on crypto-law topics are discussed below.

Also, the Polsinelli Blockchain+ team is proud to be a sponsor, speaker and participant at the Heartland Digital Asset Exchange in Kansas City on September 9, 2025. We’re excited to help bring digital innovation and the blockchain revolution to the American heartland. Please join us—and let your Kansas City friends and colleagues know.

SEC Chair Announces “Project Crypto” in Speech: July 31, 2025

Background: In a recent speech SEC Chair Paul Atkins, announced that the SEC would be launching an effort titled “Project Crypto” which he described as “a Commission-wide initiative to modernize securities rules and regulations to enable America’s financial markets to move on-chain.”

The major Project Crypto initiatives include:

1. Efforts to onshore crypto through a regulatory framework for the distribution of crypto assets in the U.S.;
2. Creation of a framework for tokenized stocks, bonds, partnership interests and other securities;
3. Modernization of custody rules for SEC registered intermediaries;
4. Allowing broker-dealers with alternative trading systems to offer trading of non-security assets alongside securities, and to provide additional services like staking and lending (potentially dubbed “Reg Super-App”);
5. Integration of decentralized finance (DeFi) and other onchain software systems into U.S. securities markets; and
6. Creation of an “innovation exemption” regime to allow projects to go to market without being required to comply with “incompatible or burdensome prescriptive regulatory requirements,” so long as they adhere to certain principles-based conditions “designed to achieve the core policy aims of the federal securities laws.”

Analysis: It would be hard to overstate how groundbreaking this development could be. Not since the 1960s “paperwork crisis” and the clearing and settlement reforms that followed has the SEC proposed such sweeping structural changes. It’s notable that the statement begins by stating the “SEC must holistically consider the potential benefits and risks of moving our markets from an off-chain environment to an on-chain one” (emphasis added), which suggests that none of the six goals are set in stone. Still, even partial modernization of the financial system using blockchain technology would represent a monumental shift—one that could reduce reliance on traditional intermediaries and reshape longstanding market structures.

That said, while most financial institutions are exploring or piloting blockchain systems internally, widespread adoption in core market infrastructure has yet to materialize and will take time. Regulatory clarity will undoubtedly help accelerate progress, but it is likely just one piece of a broader puzzle that includes operational, technological and cultural hurdles.

OpenSea “Insider Trading” Conviction Overturned on Appeal: July 31, 2025

Background: The former employee (Nate Chastain) of NFT marketplace OpenSea had his conviction overturned on appeal in what was dubbed at the time the “first ever ‘Digital Asset Insider Trading’ Scheme.” The Second Circuit ruled that the district court improperly instructed the jury that Mr. Chastain could be convicted if his actions were unethical alone, even if his employer did not treat the information he traded on as confidential and it did not represent a property interest of his employer. “[W]e cannot say that the jury would have reached the same verdict if it had been properly instructed that fraud requires appropriation of a property interest rather than unprofessional business conduct.”

Analysis: This early conviction was seemingly more about “sending a message” in what was seen as a lawless area of NFT platforms than about actual harm to others, so it is not surprising to see it overturned. What Mr. Chastain did was widely seen as unethical at the time and he lost his job (and likely millions of dollars in equity as an early employee in the unicorn that OpenSea would become) because of those actions. But at the end of the day, this was a guy in his 20’s buying NFTs, featuring them on an NFT marketplace and then selling them at a higher price based on increased demand that his featuring decisions created. This behavior is not something many would view worthy of jail time, particularly compared to far worse actors who caused real harm. Hopefully this will be the end of the matter, though the DOJ could choose to retry the case.

The President’s Working Group on Digital Assets Releases Initial Report: July 30, 2025

Background: When President Trump took office, one of his initial actions was releasing an Executive Order titled Strengthening American Leadership in Digital Financial Technology. That Executive Order established the President’s Working Group on Digital Asset Markets (“Working Group”) which was directed to submit a report recommending regulatory and legislative proposals that advance the policies set forth in the Order within 180 days. The Working Group’s 166 page report was released last week, and is available here along with a fact sheet summary here.

Analysis: All areas of the Executive branch appear to be marching in unison to position the U.S. as the crypto capital of the world. The Polsinelli Blockchain+ team intends to publish a more detailed breakdown of the Working Group report based on areas of expertise, but some initial highlights are as follows:

1. A preference for building on the CLARITY Act rather than the Senate Banking Committee’s discussion draft;
2. A substantive discussion (pages 104–112) on the challenges and policy options for applying BSA-style reporting obligations to DeFi protocols; and
3. Recognition of ongoing tax reporting issues, with a directive for the IRS to develop clearer, more tailored guidance to help taxpayers understand and track digital asset tax obligations.

The report is comprehensive and appears to be written by individuals with a strong understanding of the underlying technology. It includes a helpful chart mapping out which policy items are being directed to federal agencies and which will require Congressional action.  

The Senate Banking Committee Releases Market Structure Discussion Draft: July 22, 2025

Background: The Senate Banking Committee has now released a discussion draft of its proposed market structure legislation, following the overwhelming 294-134  House vote passing the House’s digital asset market structure bill, the CLARITY Act. At just 35 pages, the Senate’s Discussion Draft is far shorter than the 536 page CLARITY Act, but it also only addresses SEC-related topics while the Senate Agriculture Committee is expected to release a separate discussion focused on CFTC-related topics soon. The Banking Committee also released a set of 35 questions for industry input as they continue to evaluate how to regulate digital assets.

Analysis: Prior to the CLARITY Act vote and the President’s Working Group report, most believed the Senate would use that bill as a starting point and then  prepare their own legislation on market structure issues. It is unclear whether the unexpectedly wide bipartisan support for the CLARITY ACT changed that plan. It now appears that the Senate will have two separate bills, one through Senate Banking and one through Senate Agriculture, which will be combined on the Senate floor for a final vote. The expectation is that the Senate Agriculture bill addressing the CFTC elements of market structure will be far longer and closer aligned with the CLARITY Act, while the discussion draft from Senate Banking indicates potentially major changes from CLARITY on SEC-related provisions. Notably it replaces the control test in the CLARITY Act with an “ancillary asset” framework under which as long as certain disclosures are made certain types of assets may be sold as part of an investment contract without the asset itself being considered a security. Even with an expedited timeline, there is still a lot to work to be done for critical market structure legislation to work its way through the system.

Briefly Noted:

Digital Chamber Submits Final SEC Crypto Task Force Comment Letters: The Digital Chamber recently completed its project responding to the SEC’s Crypto Task Force’s public request for information. The Chamber coordinated and submitted a series of industry comment letters addressing key regulatory issues raised by the SEC. The Polsinelli Blockchain+ group was actively involved in several of these responses, including serving as lead drafters on one of the submissions. We recognize Annemarie Tierney of the Digital Chamber, along with the Chamber’s staff and the many industry-leading outside counsel and in-house practitioners, for their leadership on this extraordinary project and the impressive results it produced.

Viewed together, the letters offer a detailed overview of the legal and structural challenges facing the digital asset space—along with a range of practical solutions. The Chamber is expected to package these responses into a broader public policy push aimed at shaping forthcoming SEC guidance and rulemaking.

Traditional Finance Integration of Crypto: This piece in American Banker from some of the Franklin Templeton team warns that “legacy institutions that fail to embrace [blockchain-driven innovation] risk losing out on immense opportunities for their customers” feels particularly apt in light of the recent statements from the SEC Chair. While it’s still early, this is a good time for professionals in traditional finance to learn how crypto functions even if only to stay ahead of where the trend is heading.

SEC Greenlights In-Kind Redemptions: The SEC has approved in-kind redemptions for crypto ETFs, meaning authorized participants can redeem ETF shares by receiving the underlying crypto assets rather than cash. This is standard practice in many traditional ETFs (such as those for bonds or equities) and is considered tax- and cost-efficient. For crypto ETFs, it reduces the need to liquidate assets on secondary markets and helps institutions retain direct custody of the underlying tokens.

Samurai Wallet Developers Plead Guilty: Samurai Wallet developers Keonne Rodriguez and William Hill pled guilty to unlicensed money transmission conspiracy charges, in exchange for dismissing  the money laundering conspiracy charges. They entered their plea just a day before the jury deliberations began in the Tornado Cash case, with both sides seemingly recognizing the outcome of that case would impact this related but separate case.

Bored Ape Trademark Appeal Finalized: Yuga Labs won on a vast majority of the appeals in its case against Ryder Ripps and others for trademark law and related violations, but the case is heading back to the District Court for determination on likelihood of confusion.

Crypto Policy Resource: The Crypto Policy Under Trump: H1 2025 Report put out by Galaxy Research is a great resource for its  collection of legislative and administrative primary sources, organized by topic and agency

Tornado Trial Witness Under Scrutiny: This research from blockchain analysts has revealed that the government’s first witness in the Tornado Cash case—presented as a scam victim—never actually had their stolen funds mixed through the Tornado protocol. Instead, the witness appears to have relied on claims from a so-called “recovery firm,” which is itself reportedly under investigation, to link Tornado Cash to the theft. Despite this, the court permitted the witness to testify, raising serious questions about evidentiary standards and the role of hearsay in a high-profile crypto trial. This issue is likely to receive continued scrutiny in the weeks ahead, and we intend to cover it in more depth in our next update where we cover the verdict in this case (issued prior to publication but subsequent to finalization of this update).

SEC Statement on Liquid Staking: As this Bi-Weekly was being finalized, the SEC released a statement, providing guidance that in the Commissions view, the creation and redemption of certain forms of liquid staking tokens falls outside the scope of U.S. securities laws. We will provide a full update on the guidance and its implications in our next Bi-Weekly update.

Conclusion:

Together, Project Crypto, the Senate’s legislative proposals, the Second Circuit’s reversal of the OpenSea “insider trading” conviction and the release of the President’s Working Group report signal a synchronized push across all three branches of government to move past ad hoc enforcement and toward coherent policy for digital assets. While regulatory change will not happen overnight, the tone and coordination suggest that U.S. regulators increasingly see blockchain technology not as a threat, but as a foundation for future market infrastructure. As these developments continue to unfold, we expect both rapid innovation and complex legal debates over how best to balance market integrity, investor protection and technological progress.

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.

We paused our usual biweekly schedule so we could deliver the legislative updates while they were fresh, and in hindsight, that was the right call. There’s a lot to cover. Read on for analysis, updates and a few additional developments briefly noted below.

GENIUS Act Passes House, Signed Into Law: July 17, 2025

Background: It took the longest vote in House history, nearly 10 hours just to clear the procedural threshold for a floor vote, but the GENIUS Act ultimately passed on a striking 307–122 bipartisan vote. This rare show of consensus in today’s deeply divided Congress is an important signal of national momentum behind digital asset legislation. The President signed it into law  the following day, making it the first federal crypto legislation ever enacted in the U.S. making America one of the first countries to develop a formal legal framework for issuance, sale and redemption of digital assets pegged to a sovereign currency. The law’s regulatory framework gives businesses and financial institutions long-sought-after legal certainty around stablecoin use in payments and financial infrastructure.

Analysis: It wouldn’t be a Crypto Week without some last-minute drama. The GENIUS Act almost fell apart when a group of House Republicans demanded the addition of the Anti-CBDC Surveillance State Act language to the bill. That move would have forced the bill back to the Senate, where it likely would have died. Fortunately, cooler heads prevailed—and likely some pressure from President Trump, who publicly urged Republicans to get behind crypto legislation—and the GENIUS Act made it through cleanly. Now law, it marks a historic turning point in U.S. crypto legislation and provides opportunity for stablecoins to be integrated into faster, more secure and cost-effective payment systems.

CLARITY Act Passes House, Heads to the Senate: July 17, 2025

Background: The House also passed the CLARITY Act, its long-anticipated digital asset market structure bill with broad bipartisan support on a vote of 294-134. All House Republicans voted in favor of the legislation or abstained and 78 Democrats joined them—an improvement over FIT21, the prior House market structure bill, which drew 71 Democratic votes before dying in the Senate. The CLARITY Act now heads to the Senate, where it will meet competing frameworks already in development by the Agriculture and Banking Committees. This sets up the next phase of negotiations over what a final market structure bill might look like.

Analysis: As with the GENIUS Act, the CLARITY vote nearly went sideways, due to last minute efforts of the House Freedom Caucus to attach the Anti-CBDC Surveillance State Act language to the bill. That move would have undermined the wide bipartisan support it eventually obtained. Instead a deal was struck to attach the CBDC provision to a separate defense spending authorization package, allowing for broad bipartisan support for the passage CLARITY. It remains to be seen whether the Senate will advance the CLARITY Act itself or use it as a base for new legislation. Either way, the level of bipartisan backing in the House is a promising signal. With parallel efforts already underway in Senate committees, the prospect of comprehensive digital asset market structure legislation becoming law is more real than at any time before.

Senate Moves Forward on Market Structure: July 9, 2025

Background: The Senate Banking Committee held a hearing of the full committee titled From Wall Street to Web3: Building Tomorrow’s Digital Asset Markets. Witnesses included Summer Mersinger from the Blockchain Association, Ripple CEO Brad Garlinghouse, Chainalysis CEO Jonathan Levin and others. The Senate Agriculture Committee has also scheduled its own hearing this week. The Senate Banking Committee has since then released a discussion draft of legislation along with a formal request for industry input.

Analysis: The hearing marked another step in the Senate’s increasingly engaged posture on crypto regulation. Last month, the Senate Banking Committee leadership released its Principles for Market Structure Legislation. The hearing felt productive, reflected growing consensus that digital assets can no longer be ignored or simply litigated out of existence. Even skeptical voices are now focused on how to regulate crypto; not whether to do so (though many still appear unsure how to get their handle on something they tried to ignore away for years).

That said the Senate remains well behind the House, which has already passed the CLARITY Act. And unlike the GENIUS Act’s fairly clean path to enactment, market legislation is expected to undergo extended negotiations between the chambers. Lawmakers, like  Senator Warren and Congresswoman Waters  are expected to oppose most market structure efforts, which could complicate the path to bipartisan consensus.

Time is also running out: Congress is fast approaching its pre-election recess, and the window to finalize legislation this year is narrowing. And with the current state of dysfunction in Washington, anything is possible—including, as recent reports suggest, Congress going into early recess over political drama and rising fears of a government shutdown later this fall. The mere fact that crypto legislation is receiving this level of sustained attention in Congress is remarkable—and a sign of how far the industry has come in just a few years.

Important Amicus Filed in Right-to-Code Case: July 7, 2025

Background: Back in January, a plaintiff backed by Coin Center filed a lawsuit  seeking a declaratory judgment that developing and publishing non‑custodial digital asset software does not require a money-transmitter license (the case is Lewellen v. Bondi in the Northern District of Texas). The Department of Justice (DOJ) moved to dismiss arguing that the plaintiff failed to show a credible threat of enforcement, failed to state a plausible constitutional claim and was seeking an improper advisory opinion.

Now, a coalition of prominent digital asset stakeholders have filed an amicus brief opposing the DOJ’s motion and urging the court to allow the case to proceed. The amici include the venture firm Paradigm, the DeFi Education Fund, the Digital Chamber, the Solana Foundation and others—forming  a who’s-whoof crypto litigation advocates.

Analysis: The DOJ argues there’s no credible risk of prosecution, but that position is hard to square with its ongoing criminal cases against crypto software developers. As the amicus brief states, “[t]he developers are analogous to the manufacturers of USB drives and frying pans. Since they merely make the tools that other people use to make transfers, they are not involved in the transfers themselves.”

Despite signals from the current administration that it is taking a more constructive approach to crypto, this case highlights the persistent legal uncertainty facing developers. If the DOJ prevails, open-source software creators across the crypto ecosystem could remain exposed to prosecution simply for publishing code. Whether or not this court grants relief, the issue is unlikely to go away without either a legislative fix or clear, binding precedent. This is a fight that still needs to be fought at won or software developers in this and other spaces will remain at risk of criminal prosecution for public

Briefly Noted:

Paradigm Crypto User Research: Paradigm is a leader in crypto market research, and its latest mapping of crypto users is no exception. One of the more striking findings: 59% of respondents said the crypto assets someone owns—or previously owned—can reveal a lot about them. This suggests a growing belief that wallet history signals personal values, risk appetite or even political alignment. As crypto use becomes more mainstream, these behavioral cues may shape how users are profiled, marketed to or even evaluated for platform access. Research like this is especially valuable as more traditional businesses begin to explore the space under a more welcoming regulatory regime.

Anti-CBDC Surveillance State Act Update: Also during Crypto Week, in line with expectations Representative Emmer’s Anti-CBDC bill passed the House on a largely partly-line 219-210 vote with only 2 Democrats voting in favor. While the bill is unlikely to gain traction in the Senate, it shows concerns over digital asset financial surveillance which are worth considering.

DeFi Broker Rule Is Done: The IRS rule regarding digital asset “broker” reporting requirements issued just before the last administration ended is now officially dead, after being directed to be retracted by Congress. A quite but meaningful  win for the industry and another loss for the dwindling anti-crypto holdouts in Washington who not too long ago openly talked of building an anti-crypto army.  

Important Message from Commissioner Hester Peirce on Tokenization: In response to various tokenized securities announcements, Commissioner Peirce has released a well-timed statement “Enchanting, but Not Magical: A Statement on the Tokenization of Securities.” Her key message: tokenized or not, securities need to follow securities laws. “While blockchain-based tokenization is new, the process of issuing an instrument representing a security is not. The same legal requirements apply to on- and off-chain versions of these instruments.” This message is what Polsinelli advocated for on behalf of the Digital Chamber in a recently submitted letter to the SEC which we covered in our last update and was submitted a week before Commissioner Peirce’s statement.

DOJ v. Storm Trial Updates: A few pre-trial developments surfaced in the DOJ’s criminal case against Roman Storm (this is a good background on the case available here). Among them: the DOJ reportedly misrepresented a text from a reporter as coming from another Tornado Cash developer during the Grand Jury proceedings, and there were some other spicy pre-trial exchanges. The trial is underway and expected to last for a few more weeks, so we will keep covering those developments as they occur.

Banking Regulators Give Guidance on Crypto Custody: The FDIC, the Office of Comptroller of Currency and the Federal Reserve issued joint guidance stating that banks can custody crypto assets for customers but need to be aware of risks and take appropriate steps to manage risk.  A long overdue and welcomed step toward normalizing digital asset custody in the traditional banking system

Crypto Tax Changes: Though announced a while ago, it made the news again that the President supports  a de minimis tax exemption on appreciation related to crypto used to purchase everyday goods and services. Any such changes are likely need to come from Congress as it considers appropriate ways to tax crypto. Crypto-specific tax change proposals were not included in the recently passed “big beautiful bill” despite a last minute push.

John Doe Summons Live On: SCOTUS will not be hearing a case challenging the broad use of warrantless summons, called “John Doe” summons, against third parties including digital asset exchanges. Combined with the anti-CBDC legislative efforts and the prosecution of Roman Storm discussed above, the financial surveillance of digital assets and legality of privacy preserving technologies will continue to be hot topics to follow.

Conclusion:

The passage of the GENIUS Act marks a turning point in U.S. digital asset regulation, signaling that stablecoins are no longer operating in a legal gray space but within a defined and enforceable framework. Combined with bipartisan momentum behind the CLARITY Act and ongoing Senate efforts on broader market structure legislation, the U.S. is finally laying the groundwork for a cohesive digital asset regulatory regime.

While challenges remain, including constitutional litigation over software development to unresolved questions around CBDCs and financial surveillance, the last few weeks which included “Crypto Week” have demonstrated that meaningful, bipartisan progress is not only possible but actively underway.

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.

The U.S. House of Representatives is dedicating floor time and hearings this week to advance two major bills that, if passed, would represent the first — and possibly second — pieces of comprehensive crypto legislation ever enacted in the U.S. Lawmakers are expected to vote on the Clarity for Payment Stablecoins Act, which would establish federal rules for issuing and regulating stablecoins — and could realistically pass the House this week, with the potential to be signed by the President in the immediate future.

They are also considering what is now widely known as the GENIUS Act, a sweeping market structure bill clarifying how the SEC and CFTC share oversight of digital assets. Also in the mix is the Anti-CBDC Surveillance State Act, which is intended to prevent the launch of a U.S. central bank digital currency.

While it’s still too early to predict the final outcome, seeing these bills advance this far — especially with notable bipartisan support in such a polarized environment — is already being viewed as a significant win for the industry. It’s a clear sign that Congress is taking real steps toward providing the regulatory clarity that exchanges, DeFi projects, stablecoin issuers, and investors have been seeking for years.

We’ll be tracking these developments closely and plan to have a more detailed BitBlog next week with a full breakdown of how the votes go, what the Senate might do next, and what this all could mean for the industry. As always, reach out to the Polsinelli Blockchain+ team if you’d like to discuss how this pivotal moment could affect you. Stay tuned!

The Blockchain+ team at Polsinelli is also proud to have served as lead authors of a submission to the SEC’s Crypto Task Force on behalf of The Digital Chamber. The letter addresses the status of consumer NFTs and other digital assets that should not fall under the SEC’s purview, discusses how the SEC should develop a digital assets taxonomy, and makes certain suggestions regarding SEC processes on a going-forward basis. You can read the full letter here.

These developments and a few other brief notes are discussed below.

SEC v. Ripple Settlement Agreement Nixed by Trial Court; Appeals Still Dropped: June 26, 2025

Background: Back in May, Judge Torres denied the parties’ joint request to approve a final proposed settlement of the SEC v. Ripple matter. The parties went back to do the legwork that Judge Torres found lacking in their initial attempt, and Judge Torres has once again denied request, ruling that “the parties do not have the authority to agree not to be bound by a court’s final judgment that a party violated an Act of Congress in such a manner that a permanent injunction and a civil penalty were necessary to prevent that party from violating the law again.”

Analysis: On one hand, it’s always troubling when a court gets between two parties trying to settle a matter. On the other hand, it is hard to fault Judge Torres, who watched the SEC spend immense administrative and judicial resources over a half-decade period only for the SEC to do a complete about-face after the matter concluded. As Judge Torres ruled, the SEC briefed that “without an injunction, Ripple would continue to disregard the laws of Congress in a manner that would hurt investors,” so hard to accept the SEC effectively asking the court to ‘disregard’ its own prior statements. Ripple announced it was dropping its appeal, so this appears to be the end of the matter.

Senate Digital Asset Subcommittee Holds Market Structure Hearing: June 24, 2025

Background: The Senate Banking Subcommittee on Digital Assets held a hearing titled Exploring Bipartisan Legislative Frameworks for Digital Asset Market Structure. The same day, Senate Banking Committee Chair, along with 3 other Republican colleagues, released their proposed digital asset market structure legislation principles, which appear to align with the CLARITY Act currently pending in the House. The hearing was sparsely attended, with only five of the eleven subcommittee members making an appearance and Senator Alsobrooks (sitting in for Ranking Member Gallego) being the sole Democrat to attend.

Analysis: Having already passed stablecoin legislation, the Senate is turning its eye to market structure legislation. However, the sparse attendance could indicate that priorities lie elsewhere while the Senate waits to see how the House handles the CLARITY Act and GENIUS Act. That said, this was the first Senate hearing on market structure that seemed less exploratory and more focused on actual legislative text goals — a positive step. It looks like the goal is for market structure to be through both chambers of Congress by the end of September, which is ambitious to say the least, but an aggressive timeline gives market structure a chance of passing this year.

Stablecoin Bill Passes in Senate on 68-30 Bipartisan Vote: June 17, 2025

Background: As expected after clearing cloture, the GENIUS Act (as amended) has passed the Senate and now moves on to the House for its consideration. The bill requires most stablecoin issuers to be approved and overseen by federal financial regulators such as the FDIC, OCC, and Federal Reserve, while allowing states to approve issuance under $10 billion, as long as the entities are regulated at the state level under similar frameworks. The bill was amended to win over pro-crypto Democrats seeking stricter rules for nonfinancial and foreign stablecoin issuers. The scope of payment stablecoins is limited to centralized tokens, meaning they are issued and managed by a single entity that maintains full control over the reserves, with real world 1:1 backing, such as stablecoins backed by treasury instruments or the U.S. dollar. This is the first crypto bill to pass the Senate’s 60-vote majority needed to overcome Senate filibuster rules, unlike the Senate’s 2024 disapproval resolution for the SEC’s Staff Accounting Bulletin, which only required a simple majority under the Congressional Review Act and was ultimately vetoed by President Biden.

Analysis: There are currently enough votes in the House to get this passed and onto the President’s desk, where he has said he would sign the bill into law in its current form.  However, there are ongoing talks in the House to try to link the GENIUS Act’s passage with the CLARITY Act market structure legislation, which will face a much steeper path to passage. Hopefully, the GENIUS Act doesn’t get tripped up right before the finish line by efforts to tie it to broader legislation efforts. Effective market structure legislation could be truly transformative for the industry,  but there is a “bird in hand” argument for locking in a stablecoin win now instead of trying to do everything at once and ending nothing. Even if the GENIUS Act is signed into law, products such as Euro-pegged stablecoins, algorithmic stablecoins, and yield-bearing stablecoins have yet to be addressed.

Briefly Noted:

Payments Article: “How Stablecoins Could Transform Merchant Payments” by the Coinbase-led Payments Innovation Council is a great reference on how stablecoin payments can be implemented by businesses. The full protocol described in the article outlines a model compliant with existing payment processing laws (including smart-contract-enabled escrow for chargebacks) while potentially saving companies significant fees.

DAO Governance Study: Practitioners in the space should read this recent study on governance centralization in decentralized autonomous organizations (DAOs) and its drivers and economic implications. “Our findings suggest that DAOs thus far fall short of delivering the promise of decentralized governance.”

Fed Reputational Risk Examinations Over: The Federal Reserve has joined the OCC and FDIC in ending “reputational risk” examinations for banks it oversees. This is part of a wider effort across agencies and Congress to require firm metrics for banking examinations rather than basing examinations on industries a bank services.

Bitcoin Backed Mortgages: Federal Housing Finance Agency’s Director, Bill Pulte, has directed the agency to study consumers’ use of crypto holdings for mortgage qualifications and a letter directing Fannie Mae and Freddie Mac to consider crypto for mortgage loan risk assessments.

Prediction Markets/Funding Stays Hot: Kalshi, one of the leading prediction markets permitted in the U.S. after winning their dispute with the CFTC last year, is reportedly raising $185 million in a Series C at a $2 billion valuation. Polymarket also reportedly closed on a $200 million raise at a $1 billion valuation. The M&A activity is also starting to provide venture funds with liquidity for new investments.

In-Kind Redemptions Coming: ETF purchasers are going to be given the option for in-kind redemptions in the near future. So people can buy in or sell ETF positions without exiting the underlying asset. There are still tax compliance issues to work through before this becomes a reality, though.

FTX Creditor Distributions Begin: FTX’s bankruptcy estate started its first wave of creditor distributions on June 24, 2025, with some customers reportedly seeing higher-than-expected recoveries thanks to crypto market gains. Additional payouts are expected to continue into 2026.

Supreme Court to Hear ’40 Act Matter: The U.S. Supreme Court has agreed to hear a case that would settle a split between the Circuits as to whether there is a private right of action under the Investment Company Act of 1940, or the ’40 Act.  Courts had long held that there is no such right of action until SDNY, and then the 2^nd Circuit found that the ’40 Act contains "rights-creating language" that a court can't deny a rescission claim for violation of the statute.  While this doesn’t directly implicate crypto, many crypto and DAO structures potentially implicate the registration provisions of the Investment Company Act.  If there is a private right of action, there may be another fairly broad avenue for class action plaintiffs to bring new claims. 

Conclusion:

From stalled settlements in federal court to ambitious timelines for market structure legislation, digital asset law in the United States remains in flux. While the GENIUS Act’s bipartisan support offers a rare moment of legislative clarity, efforts to tie it to broader market reforms could still jeopardize its path forward. At the same time, regulatory agencies continue to refine how they treat crypto-related activities, from stablecoin payments to mortgage underwriting. As always, the space moves fast, and legal practitioners will need to keep pace with a landscape that is being rewritten in real time.

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.

These developments and a few other brief notes are discussed below.

GENIUS Act Vote in Senate: June 11, 2025

Background: In the Senate, there was a 68-30 vote to invoke cloture on the GENIUS Act, setting the stablecoin bill up for final passage this week. President Trump has put out a statement saying he would sign the bill into law in its current form if it hits his desk. It is expected that by the time of publication of this latest Bi-Weekly update, the GENIUS Act will have  passed the Senate, but the bill will still need to go to the House, and then the Senate again if the House makes any changes, before it can reach the President’s desk. The current House stablecoin legislation differs from the GENIUS Act in various ways, including issuers being regulated at both the state and federal levels and how foreign issuers are regulated.

Analysis: The end of week vote to invoke cloture was a move by Senate Majority Leader Thune to end the effort to pass the bill via “regular order” which opens floor proceedings for submission and debate on various amendment proposals. This means the bill is now moving forward with just the changes negotiated with Democrats which lead to 16 Democrats supporting the GENIUS Act in a procedural vote on the Senate floor last month. The list of Senators who voted in favor of cloture is worth monitoring, with Senate Minority Leader Schumer voting against. This stablecoin bill cloture vote came the same week as Treasury Secretary Bessent testified to the Senate Appropriations committee that the Treasury Department is estimating the U.S. Dollar denominated stablecoin market to grow to $2 trillion by the end of 2028.

House Financial Services and Agriculture Committees Markup CLARITY Act : June 10, 2025

Background: The House Financial Services and Agriculture committees held separate hearings to mark up the CLARITY Act with the Financial Services committee focused on the SEC related-elements, while the Agriculture committee worked through the CFTC-related provisions. The biggest change was the protection for crypto developers, wallet makers, and infrastructure providers (previously a separate bill dubbed the Blockchain Regulatory Certainty Act introduced by Representatives Emmer and Torres). The bill passed through the Agriculture committee on an overwhelming 47-6 vote. The vote in the Financial Services committee was a closer 32-19.

Analysis: The Agriculture committee’s overwhelmingly bipartisan vote came right around the start of the Financial Services committee markup, and this fact was harped on regularly by bill proponents as a reflection of bipartisan bill support. The Financial Services markup process was choppier, going well into the night with roughly 40 amendments offered without any expectation of being approved. The current draft would give the CFTC spot market authority over most digital assets, but there is seemingly a push by opponents to give the SEC more power in this area.

House Financial Services Committee Holds Crypto Hearing: June 4, 2025

Background: The House Financial Services Committee held a hearing entitled American Innovation and the Future of Digital Assets: From Blueprint to a Functional Framework to discuss issues related to digital asset regulation. Witnesses included the Chief Legal Officer for Uniswap Labs, Katherine Minarik, and former CFTC Chair Rostin Behnam. Proponents of passing digital asset legislation aimed at encouraging its development in the United States emphasized in the hearing the need for legislative certainty to protect consumers and ensure companies are not leaving the United States to pursue building products and services with blockchain technologies. Opponents cited concerns with the President’s  conflicts of interest and argued digital assets should change to meet existing laws rather than making new laws for digital assets.

Analysis: This was just a warmup to the CLARITY Act markup. This hearing started with Ranking Member Waters stating in reference to the CLARITY Act “the only thing clear about this bill is we need to start over.” Republicans pulled a surprise attendance at minority day as well, where typically only the minority party members would attend. The House Agriculture Committee also held a digital asset hearing, but that was less dramatic. There is still much to be done in the regulatory environment, and further changes can be expected including whether what has been dubbed the “DeFi Purity Test” provisions by some is included in whatever the final bill is.

Briefly Noted:

401K Updates: Our last Bi-Weekly update highlighted recent changes from the Department of Labor related to inclusion of crypto in 401(k) plans. Our employment law colleagues here at Polsinelli wrote a larger update on this and how it affects plan managers worth reading here.

Joint Statement on Validator and Developer Protections: The largest advocacy organizations in the digital asset industry put out a joint statement encouraging the Blockchain Regulatory Certainty Act (a bipartisan bill introduced by Representatives Emmer and Torres) be added to the CLARITY Act. It looks like it worked as it was added to the new bill language, so good work all around on this.

SEC Roundtable on DeFi: The SEC roundtable discussion on the agency’s potential role in decentralized finance is worth going back and watching if you did not catch it live. The intro from Chair Atkins was great, as were the additions from Michael Mosier on privacy and data communications systems.

CFTC Chair Nomination Hearing: Brian Quintenz had his confirmation hearing on June 10. It is widely expected he will be confirmed, but the fact that he will likely be the sole CFTC Commissioner shortly after confirmation (if he is confirmed) is an interesting wrinkle.

Samurai Motion to Dismiss: The developers behind bitcoin privacy tool Samourai Wallet moved to dismiss the DOJ’s unlicensed money transmitter related charges last week. “[The DOJ’s legal theory is] akin to charging an encrypted messaging app developer with conspiracy because it may know that some customers use the app to communicate about financial crimes. Or charging a burner phone manufacturer because it may know some customers use the phones to facilitate drug crimes.” DeFi Education Fund and Blockchain Association also wrote an amicus advocating for dismissal (even though the judge took a rare route and denied requests for amicus submissions).

Crypto Company IPOs: Circle’s shares opened at $69.50 on the New York Stock Exchange after its IPO priced at $31. It joins Coinbase as one of the limited publicly traded crypto companies. Gemini has also apparently has confidentially filed for an IPO with the SEC as did digital asset exchange Bullish. There are also expectations for other businesses in the space to explore going public in the near future.

SOL Spot ETF Filings: All the major players filed their S-1 prospectuses with the SEC to try to be in the first batch of SOL ETFs which everybody expects to happen. The big issue remains staking, which these vehicles need to be able to do to be competitive with spot buying on the open market.

SEC Withdraws Rule Proposals: The SEC has formally withdrawn most of the rule proposals issued under the prior administration, including several proposed rules which would have had significant implications on DeFi and crypto custody. It is a rare move to see rule proposals formally retracted rather than fading silently into the background, so this signifies an attempt to create a “clean slate” for upcoming expected rule proposals under Chair Atkins.

Coinbase State of Crypto Report: The Coinbase yearly State of Crypto research is out. Biggest findings are in the cover photo, including that 60% of Fortune 500 executives surveyed said their companies are currently working on blockchain initiatives. They also did a livestream with various big names in crypto and policy going through the results and plans for the upcoming year.

Conclusion:

As the first half of 2025 wraps up, the digital asset policy landscape is entering a critical phase. Stablecoin legislation appears poised for Senate passage, while the broader market structure bill continues to spark heated debate in the House. Meanwhile, key regulatory and enforcement developments—including the SEC’s rule withdrawals, the DOJ’s evolving theories on developer liability, and growing IPO activity—suggest a transitional moment for Web3 in the United States. With bipartisan momentum behind certain reforms and a growing chorus pushing for clarity, the next few months will be essential in shaping the legal infrastructure for blockchain and digital asset innovation.

If you have any questions about how the above developments affect your blockchain plans or any other questions regarding the legalities around various aspects of this rapidly developing industry, contact any member of the Polsinelli Blockchain+ team to set up a time to talk and see how we can be of assistance. Also, please subscribe to the BitBlog for alerts when new stories or updates are posted by our attorneys.