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.
Nobody else hit with any major SEC lawsuits, spot Ether ETF looking to launch this week, the candidate leading in most Presidential election polls selected an exceedingly pro-crypto running mate with the other Presidential nominee who has been anti-crypto stepping aside, and basically every coin is pumping. So last week was a very good week for crypto. There were some Presidential election shakeups that are assuredly going to change the Web3 legal landscape for the next 4 years, and some great articles worth reading in the “Other Stories.”
Here’s everything that happened last week in Web3 legal:
Trump Announces Pro-Crypto Senator as Vice President Candidate
Former President Trump has announced that Ohio Senator J.D. Vance will be his Vice-Presidential running mate in the upcoming election. Senator Vance is a well-known proponent of the digital asset industry who, prior to being announced as the potential VP, was working on his own legislation in the Senate similar to FIT21 in the House. Now that Biden has dropped out and endorsed Kamala to be the Presidential nominee, it appears regardless of who wins there will be an administration change and a potential associated changed in policy on digital assets.
Tl;dr: This is a crypto story for multiple reasons. The first is the role that prediction markets played in this; with those markets again being the earliest and most reliable source of Trump’s pick. The second is that Vance is a Bitcoin owner, who has preached the value of self-custody and pushed back at the SEC’s regulation by enforcement in the industry. I won’t get too excited yet (many thought Gensler as a former MIT professor who taught courses on blockchain technologies would pro-crypto; and we saw how that turned out), but it certainly signals that a change of administration could result in the industry flourishing in the U.S. like never before.
Other Stories
This was an exceptional article breaking down the SEC’s lawsuit against Consensys and comparing the allegations in the Complaint to the technical functionalities of the swap feature in the MetaMask digital wallet. Going all the way down to how setting slippage is different than setting a limit order. Must read.
Things you love to see? Craig Wright’s website having a legal notice he is a liar and not Satoshi for the next 3 months. And he is facing potential criminal charges now? I think Taylor Swift has a song about this.
People much smarter than I am are expecting the spot Ether ETF to launch on July 23rd. Which isn’t especially compelling news at this point. It looks like the next major fight is going to be whether those products will be allowed to stake the ETH people are buying into, which seems like a no-brainer but is apparently a line in the sand the SEC has drawn.
Commissioner Uyeda continues to drop bombs, stating “financial regulators must not be tempted by retroactively imposing rules through enforcement. Market participants should know the rules in advance….[regulation by novel enforcements] can stifle innovation and deprive companies and investors of the benefits of new products, services, and emerging technologies.” Wonder who he could be sub-Tweeting… Hester is still my favorite, though.
BlackRock’s Larry Fink’s about-face on bitcoin has been a joy to watch. Accept and adapt to the inevitable change or get left behind.
DeFi protocol Li.Fi getting hacked using virtually the exact same exploit as was used against it years ago is why we cannot have nice things.
Speaking above about the role of prediction markets in upcoming elections, Nate Silver has joined as an advisor to prediction market giant Polymarket.
The SEC Wells notice and lawsuit against Consensys has not stopped Uniswap from releasing its wallet bowser extension, which supports 11 chains (all ETH/Layer-2’s I think, which makes sense for Uniswap).
Do I need to move from Coinbase guy to a Kraken guy now that they are sponsoring my favorite soccer team? I guess I should start the KYC process now.
Apparently the class action originally filed against Tether by now disgraced attorney Kyle Roche is still going on? Wake me up if it ever moves past motion to dismiss stage.
Germany selling all its Bitcoin right before it pumped 15% in a week is hilarious. If governments are smart, they hold it in reserve just like gold. It’s all seized assets, so it’s found money that isn’t budgeted for anyways.
Also hilarious, a former Senator who called Bitcoin an “ideal choice for criminalized” is convicted on bribery charges. Wonder why he took his bribes in cash and gold if Bitcoin is such an obvious choice from criminals? Oh, that’s right, because having your criminal proceeds on an immutable and permanent blockchain record is dumb so using untraceable cash and gold is better if you are committing crimes.
The CFTC’s settlement with bankrupt FTX is such a non-story I almost didn’t include it. But can’t tell the story of crypto law without following the FTX downfall, so it’s here for posterity.
Vitalik posted a blog that got a lot of flak recently regarding single issue voting on crypto issues. I think I disagree? Even if a politician doesn’t have a “crypto-ethos” as explained in the blog, if the politician is supporting crypto development, that allows the “crypto-ethos” to thrive regardless of his or her votes on other issues, imo. We are all working toward a level of adoption and use that makes it impossible to stop; something we are close to but not quite there yet. Also don’t think going full Selkis is the best path either, though.
The Bank for International Settlements has recommended banks only use stablecoins on permissioned networks like JP Morgan’s Coin instead of decentralized networks like USDC on Ethereum’s network. Luckily, the beauty of decentralized networks is we can bypass banks entirely.
Apparently the judge in Binance is reconsidering the issues for the remaining tokens at issue, since her ruling only hit on BNB/BUSD. It seemed clear from the ruling these claims survived as not being fully briefed other than in the context of the rejected “Investment Contracts Require Contracts” and major questions doctrine arguments, but will be interesting to see how this second look goes.
I covered Polygon last week regarding their pivot back to their degen roots, and now they are getting ready to migrate tokens? What about all the SEC lawsuits that name MATIC as the security? Would be kind of funny if they need to amend to ask for injunction on sales.
Conclusion
If you have any questions or would like me to write about anything else, let me know on Twitter (X?) or Warpcast. 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 