This periodic bulletin highlights key legal developments governing blockchain technology, smart contracts, and digital assets, with a focus on financial services applications. Digital assets are categorized by traditional asset types or functions:
- Securities
- Virtual currencies
- Commodities
- Deposits, accounts, intangibles
- Negotiable instruments
- Electronic chattel paper
- Digitized assets
The bulletin also covers infrastructure and ecosystem developments enabling these technologies.
Key Insights
Redeemable USD-Linked Stablecoins Are Not Securities – Latest SEC Guidance
The SEC’s Division of Corporation Finance clarified that certain stablecoins (termed "Covered Stablecoins") do not qualify as securities under federal law. Issued on April 4, 2025, the guidance emphasizes that redeemable stablecoins backed 1:1 by USD reserves lack investment contract characteristics under the Howey test.
Core Keywords: Stablecoins, SEC guidance, securities law, cryptocurrency regulation
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SEC Staff Observations on Crypto Asset Market Disclosures
On April 10, 2025, the SEC outlined compliance expectations for securities offerings involving crypto assets. Key focus areas include:
- Risk disclosures for market volatility and custody practices.
- Technical descriptions of blockchain protocols and consensus mechanisms.
- Financial statements reflecting crypto holdings and liabilities.
Core Keywords: SEC disclosures, crypto assets, Regulation S-K
Regulatory Developments
Federal Updates
DOJ Shifts Digital Asset Enforcement Priorities (April 7, 2025):
- Disbands National Cryptocurrency Enforcement Team.
- Focuses on fraud (e.g., exchange hacks, investment scams) rather than broad "regulation by prosecution."
Congress Overturns IRS DeFi Broker Rule (April 10, 2025):
- Repeals reporting requirements for DeFi platforms unable to collect user data.
FDIC Clarifies Crypto Activities for Banks (April 7, 2025):
- Permits crypto custody, stablecoin reserves, and node operations without prior approval.
Core Keywords: DOJ enforcement, DeFi, FDIC guidance
State-Level Actions
- California: Proposed Digital Financial Assets Law (DFAL) regulations exempt crypto transactions from state money transmission laws.
- Kentucky & Utah: Enacted laws protecting node operators and digital asset miners from restrictive zoning.
- Wyoming: Testing its USD-backed stablecoin (WYST), slated for launch in July 2025.
Core Keywords: State crypto laws, stablecoin, mining regulations
Industry and Enforcement Highlights
- Kraken & Mastercard: Launched a crypto debit card for EU/UK merchants (April 8, 2025).
- DOJ Crackdowns: Seized $8M in a pig-butchering scam (March 26) and $200K tied to Hamas (March 27).
- SEC Closures: Dropped cases against BitClout and Crypto.com, signaling narrowed enforcement scope.
Core Keywords: Crypto debit cards, enforcement actions, SEC litigation
International Spotlight
Hong Kong SFC Guidance (April 7, 2025):
- Licensed VATPs must safeguard staked assets and disclose risks.
- Funds staking crypto must use regulated platforms.
Core Keywords: Hong Kong regulation, staking services
FAQ Section
1. Are stablecoins considered securities?
No, per April 2025 SEC guidance, redeemable USD-pegged stablecoins are not securities if they lack profit expectations from third-party efforts.
2. What are the implications of the DOJ’s policy shift?
Enforcement now targets fraud (e.g., scams, theft) rather than treating crypto platforms as unregistered securities exchanges.
3. How do state laws affect crypto miners?
Kentucky and Utah prohibit local restrictions on mining operations in industrial zones, ensuring operational freedom.
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