It was a fairly tame week in terms of legal developments until the nation-state of Argentina decided to drop a memecoin on Friday and then take out all the liquidity (i.e., “rug”) a few hours later. But other than that, Mr. Milei , how was the play? We also got the name of the likely next chair of the CFTC, and the SEC is pausing its exchange litigation matters based on the change in leadership and recently formed crypto task force at the agency.
Here’s everything that happened last week in Web3 legal:
Brian Quintenz Tapped to Lead CFTC
It is being fairly widely reported that President Trump plans to nominate a16z’s Brian Quintenz to lead the CFTC. Quintenz previously served as a Commissioner at the CFTC from 2017 to 2021. He is currently the Global Head of Policy at venture firm a16z’s crypto investment arm, and if confirmed will take over for current acting Chair Pham. He is the first potential CFTC Chair to announce his nomination on Farcaster, the digital asset native social network.
Tl;dr– If you read his prior statements on digital assets and DeFi, it is clear why the digital asset legal community is largely supportive of this pick. He is also no stranger to prediction markets, which are likely to be a hot topic for regulation in the upcoming years. He recently wrote about being excited about governments putting bonds onChain.
SEC v. Binance Joint Stay of Litigation Requested
The parties in SEC v. Binance are requesting a 60 day pause in the litigation, citing as the reason “new SEC Acting Chairman Mark T. Uyeda launched a crypto task force dedicated to helping the SEC develop a regulatory framework for crypto assets. The work of this task force may impact and facilitate the potential resolution of this case.” Since the Court in Binance agreed to the stay request and with SEC v. Coinbase currently stayed pending an interlocutory appeal decision from the Second Circuit, that just leaves SEC v. Payward (i.e., Kraken) in the exchange cases ongoing post-election.
Tl;dr– The stay request is document 296 in the case’s court file, if that is any indication on how fiercely litigated the SEC v. Binance case has been over the past roughly 1.5 years. On the same day, the SEC asked the Court to ignore certain allegations from their Amended Complaint in reaching a determination on the pending Motion to Dismiss, which makes me think the attorneys involved are still actively seeking to litigate but got the order from on-high to cool their jets? But that’s just me reading tea leaves that may or may not be there.
OTHER STORIES
SEC Crypto Task Force Meeting Logs: The SEC is posting meeting logs of it crypto task force meetings, which is really cool. So much of crypto has been built on opensource and community development, that making these task force submissions and meetings transparent just fits.
Nation-State Rug: The President of Argentina tweeted out about a memecoin $LIBRA which reached a market cap of almost $4 billion before insiders cashed out making over a hundred million in the process and tanking the price of the token. Great thread explaining it all here. I think people have the right to make stupid decisions, but can people stop making so many stupid decisions with these memecoins? And this is coming from somebody who owns tens of monkey jpgs.
Executive Order on Foreign Corrupt Practices Act: Really enjoyed this breakdown from Katherine Kirkpatrick Bos on the takeaways from the Trump EO pausing FCPA enforcement in certain circumstances. TL;dr- probably shouldn’t be bribing foreign officials still.
Stablecoin Regulatory Capture: While I support efforts like stablecoin legislation to avoid another terra/luna situation, and because requiring things that say they are backed by a dollar actually be backed by a dollar just seems like common sense, there is an undeniable level of regulatory capture involved.
House Financial Services Subcommittee Holds Digital Asset Hearing: The hearing was titled A Golden Age of Digital Assets: Charting a Path Forward. With the aggressive schedule put forward by many legislators to get various digital asset bills done, there are going to be an equally fast paced group of hearings on these issues.
SEC Commissioner Says Memecoins Not the SEC’s Issue: The name “memecoin” should foreclose anybody having a reasonable expectation of profits based on the efforts of others. But if that wasn’t clear, Commissioner Peirce recently stated that the SEC overseeing securities, and regulating memecoins fall to the numerous other federal agencies like the CFTC, FTC, and others that don’t regulate stock-like instruments.
Railgun Offering Compliant Privacy Tool: I need to look into Railgun more, which seemingly offers privacy preserving technology while weeding out the most egregious misuses by bad actors. I don’t necessarily believe that software developers need to program their software to not be used by bad actors, like hammer developers don’t need to limit sales to people who have been approved as unlikely to use the hammer to commit assault, but that’s something for another day.
ETH Foundation Lends ETH for Operating Budget: ETH Foundation put a large chunk of ETH into various lending protocols to build yield to fund operations, which has traditionally been done through ETH sales. About time. It makes no sense for the Foundation to sell when there are easy and secure ways to deploy funds (lending/staking) to fund a large chunk of operational budgets.
Congressional Op-Ed in CoinDesk: Congressmen French Hill and Bryan Steil penned an op-ed on the need for Congress to pass digital asset legislation, which is a story to cover by itself. But the fact they chose to release it on CoinDesk is also notable.
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.
Outro/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 tl;dr overviews and insights into the biggest stories from the past two weeks. I post the weekly updates on my personal blog every Tuesday, where I also provide links to more obscure legal developments and otherwise discuss industry trends and stories. 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.
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