Cryptoassets

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With its pro-crypto stance and urgent posture, the executive order promises to make the US the “crypto capital of the planet.”

By Jenny Cieplak, Zachary Fallon, Arthur Long, Yvette D. Valdez, Stephen P. Wink, Douglas K. Yatter, and Deric Behar

On January 23, 2025, President Trump issued a highly anticipated executive order on digital assets titled “Strengthening American Leadership in Digital Financial Technology” (the Order). The Order asserts at the outset that the digital asset industry is critical for US innovation, economic development, and international leadership. It further undertakes “to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy. …”

Highlights of the Order are outlined below.

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The CFPB’s proposal, its first attempt to regulate cryptocurrencies and stablecoins, is unlikely to survive the administration change.

By Parag Patel, Adam Bruce Fovent, and Deric Behar

On January 10, 2025, the Consumer Financial Protection Bureau (CFPB) issued a proposed interpretative rule that would extend the consumer protections of the Electronic Funds Transfer Act (EFTA) to certain stablecoin and other virtual currency accounts, video game accounts, and credit card rewards points accounts (the Proposed Interpretation).1 In issuing…

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A Republican Congress and the incoming Trump administration may employ the CRA to quickly overturn recent rules that faced heavy criticism from the financial services industry.

By Jenny Cieplak, Zachary Fallon, Arthur Long, Parag Patel, Barrie VanBrackle, Stephen Wink, Connor Jobes, and Deric Behar

Every four years in American politics is an opportunity to turn the tables on the party in power. But leading up to and following an election that shifts control…

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Under recent accounting rule changes, unrealized crypto gains must generally be reported on income statements, but questions arise about the alignment of the new Corporate Alternative Minimum Tax with constitutional tax principles.

By Andrew Strelka and Angelina Richards

Recent developments in taxation have brought cryptocurrency into the spotlight. The US Supreme Court’s 2024 ruling in Moore v. United States upheld a tax on undistributed foreign earnings, setting a precedent that could affect how unrealized gains are taxed under the new…

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A recent statutory instrument aims to remove legal uncertainty surrounding crypto staking and ease blockchain operations.

By Stuart Davis, Gabriel Lakeman, and Emma Trankeenan

On 9 January 2025, the UK Government published the Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 (SI 2025/17) (the Staking SI) and the accompanying explanatory memorandum (the Explanatory Memorandum).

The Staking SI together with the Explanatory Memorandum confirm that arrangements where a firm provides services to stake cryptoassets on…

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The FinmadiG introduces material implementation measures for the European Digital Finance Package.

By Axel Schiemann and Lasse Winzer

On 18 December 2024, the German Parliament (Deutscher Bundestag) has passed the Financial Market Digitisation Act (Finanzmarktdigitalisierungsgesetz — FinmadiG). The FinmadiG serves as the German implementation of several European rules, inter alia, Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA) and Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain cryptoassets (FTR). Under the amendments introduced by…

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The guidelines aim to ensure the consistent application of MiCA across the EU, including a standardised classification of cryptoassets.

By Axel Schiemann, Lasse Winzer, Thomas Vogel, Stuart Davis, and Gabriel Lakeman

On 10 December 2024, the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) (together, ESAs) have published new joint guidelines on explanations and opinions, and the standardised test for cryptoassets, under Article 97(1) of Regulation (EU) 2023/1114 on the Markets in Crypto-Assets Regulation (MiCA).

Article 97(1) of MiCA mandated the ESAs to jointly issue guidelines by 30 December 2024 that specify the content and form of the explanation accompanying the cryptoasset white paper referred to in Article 8(4), and the legal opinions on the qualification of ARTs as per Article 17(1), point (b)(ii), and Article 18(2), point (e) of MiCA.

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The court ruled OFAC overstepped its authority in sanctioning Tornado Cash, holding that its smart contracts are not “property” under the governing statutes.

By Eric Volkman, Jenny Cieplak, Stephen P. Wink, and Deric Behar

On November 26, 2024, a three-judge panel of the US Court of Appeals for the Fifth Circuit reversed a Texas District Court decision and overturned the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctions designations against certain smart contracts…

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With appropriate safeguards, distributed ledger technology may expand the use of non-cash assets as derivatives collateral, while mitigating certain market infrastructure inefficiencies.

By Yvette D. Valdez, Adam Bruce Fovent, and Deric Behar

On November 21, 2024, the Digital Asset Markets Subcommittee (the Subcommittee) of the Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee (GMAC) issued a report (the Report) that recommended expanding the use of non-cash collateral in derivatives markets through distributed ledger technology (DLT).

In the…

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In its third action involving NFTs, the SEC targets a restaurant membership token tied to fundraising and promises of potential price appreciation for buyers.

By Jenny Cieplak, Ghaith Mahmood, Nima H. Mohebbi, Stephen P. Wink, and Deric Behar

On September 16, 2024, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (the Order) against Flyfish Club, LLC (Flyfish) for an unregistered offering of crypto asset securities relating to Flyfish’s sale of $14.8 million worth of non-fungible tokens (NFTs), in violation of Section 5 of the Securities Act of 1933 (and no exemption from registration was available). The SEC alleged that the NFTs were issued to the public to finance the construction and operation of a members-only restaurant and club in in New York City.

Flyfish neither admitted nor denied any wrongdoing as part of the settlement, which does not include any allegations of misleading or fraudulent statements.

The SEC obtained this settlement roughly a year after its first and second enforcement actions against NFT issuers (for more information, see this Latham blog post on the first enforcement and this Latham blog post on the second enforcement), and less than a month after issuing a Wells Notice against one of the industry’s largest NFT marketplaces.