Congress continues to move fast in digital asset legislation, but it was an otherwise relatively quiet week in legal developments. The IRS crypto broker rules are all but dead, and both chambers of Congress had forward momentum on stablecoin legislation. For once, it seems like all the news regarding digital asset lawsuits are involving private actions and not agency actions, which is something to get used to in 2025.
Here’s everything that happened last week in Web3 legal:
IRS Crypto Broker Reporting Rules are Dead
The House voted overwhelmingly in favor of repealing the IRS broker rule change which was adopted in the final months of President Biden’s term, which would have made all self-custodial wallet providers, DeFi protocols, and even arguably internet service providers themselves reporting entities for any digital asset transaction. The vote was 292-132 in the House and 70-28 in the Senate. It will go to the Senate again, before being signed by President Trump, who has stated he intends to sign as soon as it hits his desk.
Tl;dr– This might be a “played yourself” moment because there feasibly could have been additional entities in the digital asset space that could be added as reporting entities under broker reporting rules, but since this was overly broad and aggressive, any such rule will need to come from Congress now.
Stablecoin Senate Markup Developments
The Senate Banking Committee had a markup of the GENIUS Act, which is the Senate’s version of a stablecoin bill. Even before the markup and vote, there were some changes made due to bipartisan efforts to reach agreement on how stablecoins should be registered and monitoring in the U.S. The bill passed through committee on a 18-6 vote, with five Democrats (Warner-VA; Kim-NJ; Gallego-AZ; Rochester-DE; and Alsobrooks-MD) voting in favor. Meaning the 4 most junior Democrats on the Senate Banking Committee and Warner were the ones who cross party lines to vote in favor of the GENIUS Act.
Tl;dr– Senator Warren predictably tried to propose amendments which would have killed the viability of the bill (to the delight of traditional banks), but all those proposals failed with five Democrats eventually crossing party lines to vote in favor of the legislation. It can be expected there will be closed door work on the bill to address the concerns of Democrats who want some changes to the bill, so be on the lookout for those changes to get as much bipartisan support for the legislation as possible. The House is also working on its own bill, holding a hearing stablecoins and CBDCs this week, and the Senate Banking Committee also passed a bill regarding debanking which went along party lines.
OTHER STORIES
NFT Pony Lawsuit Brought: I missed this when it dropped (shout out @gagerajusalicki for including this in his firm’s regular crypto law update) but there was a class action filed against Game of Silks? Plaintiffs firms are coming; they just better not come for my digital horse racing game of choice (not naming names, snitches get stiches).
Digital Chamber President Interview: President of the Digital Chamber, Cody Carbone, gave an interview on to current policy environment on digital assets which is a must-listen. Half hour interview does a way better job than my weekly blog could ever do on explaining the current regulatory landscape for Web3.
Europe Scared of Crypto: Pierre Gramegna, the managing director of the “European Stability Mechanism” (which is apparently an official agency/position?) is concerned dollar backed stablecoins may disrupt Europe’s monetary sovereignty. And he should be. Dollar-backed stablecoins is the best way for the U.S. to maintain or expand dollar dominance.
SEC Likely to Abadon Reg ATS Rule Changes for Crypto: Acting Sec Chair Mark Uyeda gave a speech saying he directed staff to kick the tires on (i.e., abandon) a proposed rule change that would expand the definition of an “exchange” in a way that would loop in DeFi and similar providers.
Geofenced Airdrop Costs to Americans: Dragonfly released its State of Airdrops report for 2025, which shows that Americans missed out on as much as $2.6 billion in potential revenue (and the U.S. missed out on taxing that revenue) by policies which resulted in Americans being disqualified from those airdrops. Glad to be protected from free money.
New DeFi Education Fund Head: Amanda Tuminelli is taking over as CEO of industry advocacy group DeFi Education Fund. She has done a great job as Chief Legal Officer, and I have no doubt that will continue in her role as CEO. Congrats!
Come in and Register: Now that crypto firms can actually have a dialog with the SEC without fear that opening the dialog will lead to investigations and hostile actions, a record number are filing for various approvals at the agency. Crazy how that works.
Sandwich Attack/Laundering: This USDC/USDT sandwich attack story is crazy. I am on team “this has to be laundering because no way somebody sets slippage in a stablecoin exchange that high or has a sandwich attacker ready for somebody to be that dumb” theory. Also, not worth its own story, but the issue with Hyperliquid and any leveraged trading in DeFi is stuff like this happens. Not sure there is ever a way to fix this other than KYC’ing users.
NFT Patent Lawsuit: This lawsuit over NFT watch patent rights is going to be one I need to follow along with. I don’t know how many people are displaying their monkey jpgs on their smart watches with current prices, but interesting lawsuit either way.
CFTC Withdraws Swap Exchange Letter: The CFTC withdrew its prior Staff Advisory Swap Execution Facility Registration Requirement which arguably required DeFi participants to register with the agency, and which 3 DeFi platforms were charged with disobeying in 2023. Signaling an intent to back off prosecution of decentralized platforms for failure to register violations.
Additional SEC Submissions: a16z submitted its responses to various SEC questions regarding digital asset regulatory approach, Gabe Shapiro submitted his “Token Safe Harbor 3.0”, and Coinbase, Circle, and WisdomTree’s meeting minutes with the crypto task force were released.
Bitcoin Act Introduced: I don’t really care about nation-state reserves or stockpiles of digital assets in the grand scheme of things, but worth mentioning that Senator Lummis submitted a bill which would direct Treasury to purchase a total of 1 million Bitcoin over a five-year period and hold this Bitcoin for a minimum of 20 years in a Strategic Bitcoin Reserve.
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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