Insights & Regulatory Updates
Crypto Legislation Likely Coming Under Trump, Ex-SEC Chief Jay Clayton Predicts
As the United States braces for a shift in regulatory priorities, former SEC Chairman Jay Clayton announced on Wednesday that he anticipates significant legislative action on cryptocurrency under President-elect Donald Trump’s upcoming administration. Speaking at a gathering of securities lawyers in New York, Clayton hinted at a friendlier regulatory environment for the crypto industry, a stark contrast to the enforcement-heavy approach seen under President Joe Biden.
18 States Sue SEC and Gary Gensler for Alleged ‘Regulatory Overreach’ on Crypto
The Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, are facing significant legal pushback from 18 Republican attorneys general, who have filed a lawsuit accusing the agency of overstepping its regulatory bounds in its enforcement actions against the cryptocurrency industry. The lawsuit, led by Kentucky Attorney General Russell Coleman, is a pivotal moment in the ongoing battle over the future of crypto regulation in the United States.
The Impact of Technology on Securities Markets: A Legal Perspective on the SEC’s Report
The SEC’s recent report to Congress on the impact of technological advances in securities markets isn’t merely a catalog of tech developments; it’s an inventory of how these tools alter the market’s fundamental mechanics—and, yes, its regulatory challenges. If the 20th century markets were defined by floor traders, telephone orders, and paper filings, the 21st century has swiftly evolved into a digital arena dominated by algorithms, blockchain, and AI. The upshot? We’re witnessing a market that’s faster, more accessible, and potentially more transparent, but also laden with new regulatory wrinkles. Let’s examine what the SEC has to say about this digital transformation and its implications for legal compliance, investor protection, and, well, market stability.
Tether CEO Acknowledges Vulnerability to U.S. Government Control Amidst Renewed Scrutiny
As Tether, the largest stablecoin issuer in the crypto market, faces increasing regulatory pressure, CEO Paolo Ardoino recently underscored the company’s complex relationship with U.S. authorities in an interview with CoinDesk. Despite Tether's compliance with international sanctions and cooperation with law enforcement, Ardoino acknowledged that the company’s survival ultimately depends on the discretion of U.S. regulators. "If the U.S. wanted to kill us, they can press a button and kill us anywhere,” Ardoino stated, adding that Tether’s approach is not to challenge U.S. authority directly.
Coinbase CEO Calls for Accountability from Future SEC Chair Over Crypto Regulation Missteps
In a bold statement on October 29, Coinbase CEO Brian Armstrong voiced his frustrations with the Securities and Exchange Commission's (SEC) handling of crypto regulation, stating that the agency's next chair should issue a public apology for what he described as "damage" to the American crypto sector. Armstrong highlighted years of inconsistent statements and actions from the SEC, which he argues have harmed innovation, created regulatory confusion, and discouraged crypto businesses from operating in the U.S.
Exploring FINRA's New Report on Metaverse Opportunities and Challenges for the Securities Industry
On October 24, 2024, FINRA released an eye-opening report, The Metaverse and the Implications for the Securities Industry, addressing the securities industry’s potential engagement with the metaverse—a rapidly evolving virtual landscape. The report underscores emerging use cases, industry challenges, and regulatory considerations for broker-dealers and other FINRA member firms looking to leverage immersive virtual technology to innovate in customer engagement, data visualization, trading, and investor education.
Gensler Reaffirms SEC's Regulation-By-Enforcement Approach to Crypto Amidst Industry Debate
Securities and Exchange Commission (SEC) Chair Gary Gensler has once again reiterated his commitment to the agency's ongoing regulation-by-enforcement strategy concerning cryptocurrency. Despite criticism from various sectors of the digital asset industry, Gensler maintains that the SEC’s efforts are firmly grounded in decades of legal precedent, and he intends to continue this approach to provide clarity and protection in the rapidly evolving world of digital assets.
SEC Alleges Cumberland DRW Sold $2 Billion in Unregistered Securities
In a new enforcement action that adds fuel to the ongoing regulatory battle over digital assets, the U.S. Securities and Exchange Commission (SEC) has sued Chicago-based crypto trading firm Cumberland DRW. The lawsuit, filed on October 10, 2024, accuses Cumberland of operating as an unregistered broker and handling over $2 billion worth of crypto assets—specifically, tokens like Solana and Polygon—that the SEC claims are unregistered securities.
SEC Commissioner Mark Uyeda Criticizes Agency’s Crypto Policy as a “Disaster”
In a striking rebuke of the U.S. Securities and Exchange Commission’s (SEC) approach to cryptoc regulation, SEC Commissioner Mark Uyeda publicly criticized the agency's handling of the industry, calling it a "disaster" during a Fox Business panel on October 10. Uyeda's remarks reflect growing internal dissent over how the SEC, under the leadership of Chair Gary Gensler, has enforced crypto policy without providing the much-needed clarity the sector requires.
SEC Chair Gary Gensler on Crypto: ‘It’s Unlikely This Stuff Is Gonna Be a Currency’
In a recent speech at New York University School of Law, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler made headlines with his assertion that cryptocurrencies like Bitcoin (BTC) are unlikely to ever become widely accepted forms of currency. While this statement may have grabbed attention, it largely reiterates what many industry participants already understand: the primary value of crypto assets lies in their utility as a store of value or an investment vehicle, not as a replacement for fiat currencies. Gensler’s comments, while perhaps technically accurate, miss the mark in addressing the real issues facing the crypto industry today.
SEC Charges Three So-Called Market Makers and Nine Individuals in Crypto Crackdown
In a decisive move against market manipulation in the digital asset space, the Securities and Exchange Commission (SEC) recently announced fraud charges against three entities claiming to be market makers, as well as nine individuals. The charges stem from alleged schemes designed to create a false impression of active trading for various crypto assets offered and sold as securities to retail investors.
Legal Implications of SEC Jurisdiction Over Secondary-Market Sales of Network Tokens
The ongoing dispute between Foris DAX Inc. ("Crypto.com") and the Securities and Exchange Commission (SEC) represents a pivotal moment in the regulatory landscape for digital assets. Crypto.com is challenging the SEC's assertion of jurisdiction over secondary-market sales of various network tokens, which are typically used to access or interact with blockchain networks.
Untangling the SEC's Web: Regulatory Challenges Facing Crypto and Digital Assets
Under the leadership of Chairman Gary Gensler, the Securities and Exchange Commission (SEC) has adopted an approach to digital assets that some have described as "enforce first, make rules never." This strategy, while potentially effective in areas where clear guidance exists, has left digital asset market participants in the United States facing significant regulatory uncertainty. Without clear rules, the SEC’s aggressive enforcement tactics have had the effect of stifling innovation and driving businesses overseas. This article explores the key issues in the SEC’s current stance on digital assets and the need for a more thoughtful and predictable regulatory framework.
SEC Amends Binance Complaint Amid Industry Criticism Over Token Classification
In a recent development, the U.S. Securities and Exchange Commission (SEC) amended its complaint in the ongoing case against Binance, one of the world’s largest cryptocurrency exchanges. The SEC acknowledged that it may have caused confusion regarding its stance on whether certain digital tokens should be classified as securities. This amended filing, submitted in the District of Columbia, includes procedural adjustments and legal clarifications, reflecting an evolving enforcement strategy as the SEC seeks to address the regulatory challenges posed by digital assets.
Opinion: U.S. Congress Must Establish a Clear Regulatory Framework for Crypto Assets to Maintain Western Leadership in Financial Innovation
By now, we all know that cryptographic blockchain has the potential to revolutionize the transfer of value over the internet—quickly, inexpensively, and without intermediaries. With mass-adoption, a blockchain-powered immutable public ledger of transactions could reshape financial systems globally. Yet, like any transformative technology, its long-term success hinges on legal and regulatory clarity. It is time for Congress to establish a comprehensive, sensible framework for regulating crypto assets.
SEC Targets OpenSea: The Potential Implications for the NFT Market
The Securities and Exchange Commission (SEC) has recently issued a Wells notice to OpenSea, the most prominent marketplace for non-fungible tokens (NFTs), signaling a potential lawsuit for securities law violations. This move marks a significant development in the SEC's ongoing scrutiny of the digital assets space, particularly as it relates to the burgeoning NFT market.
FINRA Update on Crypto Asset Activities
On August 14, 2024, the Financial Industry Regulatory Authority (FINRA) issued an important update regarding its ongoing efforts to engage with its members on the subject of crypto asset activities. Referred to as "crypto assets," these are defined by FINRA as assets issued or transferred using distributed ledger or blockchain technology. These assets include virtual currencies, coins, and tokens, which may or may not meet the definition of "securities" under federal securities laws.
Court Denies SEC’s Request for Disgorgement in Ripple Case: Implications for Crypto Enforcement
In a notable development for the cryptocurrency regulatory landscape, a federal court has recently denied the Securities and Exchange Commission’s (SEC) request for disgorgement of profits in its case against Ripple Labs. This ruling, issued by Judge Analisa Torres of the US District Court for the Southern District of New York on August 7, 2024, marks a significant setback for the SEC’s efforts to impose substantial financial penalties in crypto cases primarily based on registration violations.
SEC Charges Abra with Unregistered Offers and Sales of Crypto Asset Securities
The SEC's recent enforcement action against Plutus Lending LLC, doing business as Abra, underscores the agency's unwavering commitment to ensuring that crypto asset offerings and sales comply with federal securities laws. The charges filed today highlight significant regulatory issues surrounding the unregistered offers and sales of crypto asset securities, specifically through Abra's retail crypto asset lending product, Abra Earn.
Top 10 Securities Enforcement Developments of Summer 2024
In this review, we highlight the top 10 securities enforcement developments of summer 2024, offering insights into the latest trends, landmark cases, and strategic shifts that are likely to influence compliance strategies and corporate governance moving forward. Whether you're navigating these issues in-house or advising clients, understanding these developments is essential for staying aligned with the evolving standards of securities law.