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 LongYvette D. ValdezStephen P. WinkDouglas 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.

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

The bipartisan bill seeks to foster innovation and promote US dollar dominance while protecting consumers and mitigating illicit finance risks.

By Jenny Cieplak, Arthur LongYvette D. ValdezStephen P. WinkAdam Fovent, and Deric Behar

On April 17, 2024, US Senators Cynthia Lummis from the Senate Banking Committee and Kirsten Gillibrand from the Senate Agriculture Committee introduced proposed legislation to create a US regulatory framework for stablecoins. The bipartisan Lummis-Gillibrand Payment Stablecoin Act (the Bill) seeks to promote responsible innovation and preserve US dollar dominance, while protecting consumers and digital asset market participants.

As federal regulation remains patchy, firms may want to consider a New York state charter as a potential avenue to expand digital asset offerings in a compliant manner.

By Arthur S. Long, Barrie VanBrackle, Stephen P. Wink, and Deric Behar

On March 22, 2024, WisdomTree, Inc., a global asset management firm, announced that the New York Department of Financial Services (NYDFS) granted a New York limited purpose trust company charter to its subsidiary WisdomTree Digital Trust Company

The proposed regulatory framework would create substantive obligations on issuers of fiat-referencing stablecoins to safeguard the public.

By Simon Hawkins and Adrian Fong

On 27 December 2023, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) released a consultation paper on their legislative proposal for a regulatory regime governing stablecoin issuers in Hong Kong (Consultation Paper). The HKMA followed with its own press release announcing a future sandbox arrangement for stablecoin issuers.

This blog post summarises the proposed Hong Kong regulatory framework set out in the Consultation Paper, and next steps for stablecoin issuers who may fall within scope of the proposed regime.

The Monetary Authority of Singapore announced a new framework that seeks to ensure value stability for stablecoins regulated in Singapore.

By Simon Hawkins, Farhana Sharmeen, Tan Gen Huong, and Adrian Fong

On 15 August 2023, the Monetary Authority of Singapore (MAS), Singapore’s primary regulator for banks and payment services, announced its new stablecoin regulatory framework. The new framework introduces licensing and other requirements for stablecoin issuers with operations in Singapore.

This framework follows a consultation paper in October 2022, on the MAS’ proposed approach to the regulation of stablecoin issuers and intermediaries, and a consultation paper on the scope of e-money and digital payment tokens in December 2019, in which the MAS considered the need to review its regulatory approach to accommodate stablecoins with the potential to become more widely used as payment instruments. These publications, together with the Hong Kong Monetary Authority’s discussion paper on its proposed approach to the regulation of stablecoins, (see Latham’s blog post), indicate that Asian regulators continue to consider appropriate guardrails for cryptocurrencies in light of significant consumer interest.

The US Treasury opens a Pandora’s box of legal issues as it targets a decentralized finance protocol used for both licit and illicit means.

By Eric Volkman and Deric Behar

On August 8, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against decentralized virtual currency “mixer” Tornado Cash (and 44 associated USDC and ETH addresses) — the first action of its kind against a decentralized finance (DeFi) protocol.

Mixers (or “blenders”) are centralized

The global central bank cooperative body would bring stablecoins within the international standards for payment, clearing, and settlement systems.

 By Alan W. Avery, Stuart Davis, Simon Hawkins, Yvette D. Valdez, Stephen P. Wink, Pia Naib, and Deric Behar

On July 13, 2022, the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a joint report on the regulation of stablecoin arrangements

The RFIA could ease tax compliance burdens for parties transacting in digital assets and defer or eliminate tax on some transactions.

 By Jiyeon Lee-Lim, Elena Romanova, Ted Gkoo, and Jacob Nagelberg

Latham & Watkins presents a blog series on the Responsible Financial Innovation Act, which was introduced in the US Senate on June 10, 2022, to create a framework for digital assets, cryptocurrency, and blockchain technology. This fifth post in the series covers taxation issues.

Taxation

Taxation issues are covered in Title II of the bill (Responsible Taxation of Digital Assets), which incorporates the new definitions for digital asset and virtual currency provided for in Title I of the bill (see discussion in this previous post).

The RFIA would modify the Internal Revenue Code (the Code) to provide new rules and extend certain existing rules to cover digital assets. It would also require that the Internal Revenue Service (IRS) issue guidance on several topics frequently requested by the digital asset industry.

The RFIA could make it easier for fintechs dealing in digital assets and stablecoins to access Federal Reserve bank services.

 By Alan W. AveryPia Naib, and Deric Behar

Latham & Watkins presents a blog series on the Responsible Financial Innovation Act, which was introduced in the US Senate on June 10, 2022, to create a framework for digital assets, cryptocurrency, and blockchain technology. This fourth post in the series covers banking and payment stablecoin issues.