Intro/Disclaimer: Since late 2022, I’ve prepared weekly updates for attorneys at my firm to stay abreast of the latest Web3 legal developments. The biggest stories are included in Bi-Weekly posts on the firm’s BitBlog, where we provide concise tl;dr overviews and insights into how these developments might ripple through the industry. In pursuit of a more thorough and personal discourse, I also share expanded versions of these updates on my personal blog every Tuesday. Here, you’ll find my unvarnished perspectives, offering a deeper dive into the nuances of these legal narratives. Please note, the views and opinions I express, both on BitBlog and my personal blog, are solely my own. They do not reflect the official stance or endorsement of my firm.
There was further briefing in the Coinbase multi-front battle vs. the SEC, as amicus came out to support the Coinbase petition for rulemaking. There was also a sanctions ruling against the SEC, a Congressional hearing on SEC overreach, and Blackrock entered the tokenized securities market.
Here’s everything that happened last week in Web3 law:
Amici Support Coinbase Appeals SEC’s Denial of Rulemaking for Digital Assets
The industry continues to show up in filing amicus briefs on important cases, this time with amicus briefing filed in support of Coinbase’s appeal of the SEC’s denial for digital asset rulemaking. Briefs were filed by Paradigm, LEJILEX, the Texas Blockchain Council, the Crypto Council for Innovation, and the U.S. Chamber of Commerce. This level of legal activism is not something often seen in money-making endeavors and is great to see in a digital asset industry which is highly reliant on unassociated groups of individuals coming together to accomplish tasks outside of just litigation.
Tl;dr: As I said in my breakdown of the Coinbase briefing, I thought the best part of these briefings were demonstrating the illogical and bad faith nature of the SEC’s “come in and register” talking points. I was very happy to see Paradigm weigh in and crystalize this point with specific cites to applicable Code of Federal Regulations sections. The Chamber of Commerce’s support was also strong. “The SEC’s belated, conclusory denial is a textbook example of agency action that is arbitrary, capricious, and an abuse of discretion—in other words, action that must be set aside under the APA. Whatever discretion agencies ordinarily possess, a refusal to undertake rulemaking cannot stand if it is ‘plainly misguided.’” Also, leave it to Jason Gottlieb to work “Precambrian explosion of different technologies” into his briefing. *Golf Clap*
Other Stories
For obvious reasons, I will not comment on this case other than to provide a link to the story titled “Utah judge denies SEC’s motion to dismiss DEBT Box case, imposes sanctions” and a link to the decision itself.
The House Sub-Committee on Capital Market held a hearing titled “SEC Overreach: Examining the Need for Reform” was a fun watch. The witness from the Heritage Foundation had especially strong words against the agency, stating “Perhaps the leading area in which the Commission has been irresponsible is the area of digital assets, or crypto assets…If you were to write a book on how not to regulate, the Commission’s modus operandi in this area would be the first chapter.” Boom. Roasted.
Vitalik is on Farcaster so I am on Farcaster. But for real, I have been spending more time and learning more on Farcaster than X recently. It is very crypto-native, so hard to see it getting mainstream adoption anytime soon, but I could very much see most of current crypto-twitter making their way to Farcaster. The hat stays on.
The SOL memecoin project “Slerf” burnt $10 million in SOL sent for pre-sale tokens. On one hand, if somebody wants to take the risk to send money to an anonymous wallet in exchange for animal-themed memecoins they should be able to make that (what I view as subjectively stupid) decision. On the other hand, I don’t love the flouting of the degen casino element of digital assets when legitimate market participants are arguing for SEC rulemaking.
Lots of focus on what TradFi coming to blockchain technologies means for those technologies going forward. It is cool that people with lots of money see something I support as being useful, but it doesn’t change my calculus. The technology will win (or won’t) because it is better (or isn’t). Not because Blackrock (or anybody else) decided it was beneficial to their bottom line.
Speaking of Blackrock, they purchased $100M in USDC on Ethereum for what appears to be a tokenized fund, and people immediately started airdropping the wallet meme coins. Never change.
If French Hill is the next lead of the House Financial Services Committee, that will be a boon for the industry once Congress starts doing its job making laws again in a post-election year.
Fidelity amended its spot Ether ETF application to include staking, following Franklin Templeton’s lead.
Genesis settled with the SEC for an agreed $21 million. With the SEC’s claim to funds as last in line from the bankruptcy claims, this is a largely meaningless settlement.
I enjoyed this rundown of Prometheum (which for some reason is only named in the footnotes?) going rogue and calling ETH a security for the SPD to custody. The article gives entirely too much credit/power to a single special-purpose broker/dealer for me to take its conclusions about potential far reaching implications seriously, but it is well written and gives background on law worth reading.
Web3 gaming story about a new $100 million fund? Yeah, I am going to include that in my update.
I need to watch this Laura Shin interview of 3AC alleged complete scumbag bad person (allegedly; he is quick on the suing people who call him out) Kyle Davies. On one hand, she is doing what journalist do and getting a story. On the other hand, I don’t know how I feel about platforming this guy to make his excuses for abjectly horrible behavior which has ruined lives.
On Wednesday, rumors were flying that the SEC was gearing up to formally declare Ether to be a security. It appears the only source were some 2022 subpoenas? But allowed a nice little dip for me to buy into, so that was cool.
I always love a good Scott Johnsson thread on ETF issues. Just the best in the business along with other great sources on these topics.
In a headline nobody wants to see, “SEC and other federal agencies seek to bulk up on cryptocurrency resources in 2025 budget requests.” I am personally a fan of Congressman Emmer’s response.
I don’t think I agree with the finding that it was unethical to get the keys of the castle out of the hands of Adderall riddled SBF, but I need to at least include a link to a recent law review article “FTX’d: Conflicting Public and Private Interests in Chapter 11” which alleges “deceptive tactics” by Sullivan and Cromwell to gain control of FTX to proceed with bankruptcy.
Conclusion
If you have any questions or would like me to write about anything else, let me know on either of my Twitter (X?) pages! As always, I am an attorney, I am not your attorney. For legal advice, you should always consult (and pay for) an attorney.
The NFTtorney 