It was a relatively quiet week in terms of blockchain legal developments. Most the updates are clarifications on prior major stories, like Ripple’s announcement that it will be dropping its cross appeal as well, and some discussions regarding the current regulatory approaches to stablecoins.
Here’s everything that happened last week in Web3 legal:
OTHER STORIES
SEC Commissioner Speech: The DC Blockchain Summit was last week, and in addition to getting to catch up with so many attorneys in the space in person, SEC Commissioner Peirce’s statement was great to see.
Ripple Drops Cross Appeal: It appears the Ripple will also not be appealing the decision in its case against the SEC. The SEC will also ask the district court to lift the standard SEC injunction for cases like these, but no guarantee that is approved. Either way, this whole thing is coming to an end it appears.
World Liberty Foundation Stablecoin: President Trump’s World Liberty Foundation is launching a stablecoin USD1. Seems like the whole idea behind WLF is to make DeFi more accessible to financial institutions and regular individuals, so keeping the stablecoins in-house to get access to that sweet sweet bond yield makes sense. Fractionalization of stablecoin markets seem suboptimal (Fidelity is looking to launch their own as well), though.
Kentucky Self-Custody Law: Kentucky recently enacted a law which passed unanimously on a bipartisan vote and guarantees individuals the right to hold and manage their crypto in self-hosted wallets. Hopefully we see similar protections at the federal level soon.
Hyperliquid Decentralization King is Unclothed: It’s an open secret that many popular protocols are decentralized in name only (DINO). This was made more apparent when Hyperliquid had a low market cap coin manipulated and the Hype validators colluded to prevent the outcome dictated by the protocol to prevent losses to user funds backing the protocol. Hard to say “we are decentralized/can’t stop North Korea from using” if the validators step in to stop situations when it effects their own bags like this.
SEC Chair Confirmation Hearing: Paul Atkins had his Senate confirmation hearing last week. Senator Warren is not a fan, but there wasn’t anything unexpected discussed at the hearing. He has a lot of work ahead of him and will get plenty of help form the industry in the various upcoming roundtables.
Securities Clarity Act Reintroduced: House Majority Whip Tom Emmer has reintroduced his Securities Clarity Act which specifies that any asset sold as the object of an investment contract, is distinct from the securities offering it was originally a part of. This definition is technology-neutral and applies to all assets sold or offered that would only be considered a “security” because of their inclusion in an investment contract. With unclear status of the market structure bill, this would be a solid alternative in combination with rulemaking and no-action letters from the SEC.
Prediciton Market Governance Attack: The whole background on this Polymarket resolution is fascinating and shows we have a long way to go before we have decentralized prediction markets which cannot be manipulated in determining resolutions on disputed issues.
Yield-Bearing Stablecoins: Lots of debate on the yield ban in stablecoin legislation. It’s clear that this prohibits issuers from making the asset itself either reward bearing or rebased like a liquid staking token, but not sure what this means for things like interest on USDC held on Coinbase or PayPal’s practice of juicing yield in lending protocol for pUSD pools. But also I don’t think saying “if you want to issue a stablecoin, you gotta be as vanilla of a business as a FinTech can be” is a terrible standard.
SEC Drops Immutable Probe: Looks like Immutable finally got out of its SEC Wells notice like the others in similar non-fraud investigations/cases. Crypto gaming is back, baby!
Shark Tank v. Bitboy: Kevin O’Leary of Shark Tank fame is suing Ben Armstrong (AKA “Bitboy”) of…some sort of fame? This would be a non-story if the Complaint wasn’t so wild. My favorite is paragraph 39, where Bitboy claims he can’t be sued. Guess he was wrong on that?
FDIC Removes Crypto Limits: The FDIC has released a statement that it will no longer require supervised institutions that “engage in permissible crypto-related activities” receive prior agency approval. Another big win.
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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