It was great seeing so many people in Toronto last week! Despite some recent drama which called into question whether digital asset market structure legislation can get done in the U.S. this year, the vibes were high and people seem genuinely excited about what is being built in the space (and, more importantly, being built in the United States). The big news is stablecoin legislation finally going forward for vote in the Senate, and more traditional financial companies are cementing plans to bring aspects of their businesses on-chain.
Here’s everything that happened last week in Web3 legal:
GENIUS Act Bill Text Finalized in Senate
After a few weeks of political jockeying, it appears we will have the final language of the Senate stablecoin bill titled the GENIUS Act and a vote after Memorial day. There were attempts to get the process started at the end of last week, but there weren’t enough votes in town at the end of the week to get it done. This is expected to pass the Senate, but with everything going on in the House unrelated to crypto, it may be a while before this bill becomes a law (if ever). As of writing this, the bill is expected to obtain the 60+ yes votes needed on cloture before it moves to Senate floor debate, limited to 30 hours. There is still opposition from some in the Senate, primarily citing to the stablecoins issued by a company owned by the Trump family, with opponents claiming their “preliminary analysis concludes that the draft includes no provisions prohibiting President Trump and his family from lining their pockets through corrupt crypto schemes and accepting payoffs from foreign governments.”
Tl;dr– It is unclear why there was such a push to prevent stablecoin issuers to pay interest (or “yield”) to their holders, other than to provide regulatory protections from competition. The prohibition appears to only be applicable to the issuers themselves, though, so affiliate marketing programs seem permissible under the bill, which is how most these interest payments are currently done anyways. The newly added language about non-financial publicly traded companies (i.e., Meta) being prohibited from issuing stablecoins also shows there is lasting fear over the Facebook/Libra stablecoin attempts from years ago, but is a nothing-burger for the legislation as a whole. Even with the newly added language, passing this bill would be a huge accomplishment for the industry. As I said recently when interviewed by Bloomberg law, any claim that regulating stablecoins somehow benefits the Trump family (which now must abide by those regulations) rather than the American public at large is just fearmongering.
OTHER STORIES
Stocks On Chain II: Following up on last week’s update on stocks moving on-chain, Tuongvy Le and Austin Campbell released this awesome article (and twitter threads giving tl;dr along with useful infographics) on how cryptographically secured addendum-only ledger technology can offer a fundamentally better way to own and trade stocks. Good timing with the SEC roundtable on this issue last week as well.
Digital Dollar vs. Digital Bank Deposits: I enjoyed this article examining the difference between stablecoins representing a digital dollar and digital representations of a bank deposit. While I am at it, I also added this law review article on self-custody wallets to my reading list.
SEC FAQ Guidance: The SEC released a set of frequently asked questions (“FAQs”) relating to the application of certain broker-dealer rules to crypto activities. While the SEC said these “simply reiterate what our rules already say or do not say” I believe many broker-dealers were waiting for this type of guidance to go through with various crypto brokering activities.
SEC v. Ripple Deal Rejected: Judge Torres denied the parties’ joint request to rule in favor of a proposed settlement which would finally end the SEC v. Ripple matter. It appears that the judge is just looking for the parties to do more of the required legwork to obtain the relief requested, but still seeing this drag on can’t be something either side is happy about.
Coinbase Enters S&P 500: Coinbase has joined the S&P 500 index, which simply being listed on is certain to pump the company’s value due to being included in additional index fund allocations. Crypto continues to get integrated into Wall Street.
M&A Can’t Stop/Won’t Stop: More M&A action last week, with Robinhood acquiring a Canadian crypto trading firm for $175 million.
Bill to Ban Federal Officials in Crypto: Various Democrats have proposed a bill that would ban the creation and promotion of cryptocurrencies by the President, Vice President, Congress, and Senate-confirmed Cabinet members. Expand it to all stock trading and I am all for it, but targeting a single industry seems…reactionary?
Yuga Sells Punks IP: It looks like the Infinite Node Foundation (NODE) has acquired the CryptoPunks IP which was purchased by Yuga Labs a few years ago from the creators, Matt Hall and John Watkinson (who are apparently the highest selling living artists of all time due to $3.07B in CryptoPunk sales volume). Punks always seemed like a side quest for Yuga, so passing that legacy on to a full-time steward makes sense.
Charges Against Early Crypto Exchange Dropped: I missed this last week, but federal prosecutors have dropped their appeal of various charges brought against the operator of cryptocurrency exchange platform AurumXchange who operated the exchange prior to FinCEN issuing guidance on money transmission requirements for digital asset exchanges. Seemingly the right result in a no-fraud matter.
More Wrench Attacks: This video of an attempted kidnapping of a digital asset company CEO and his daughter, seemingly as an attempted wrench attack to force him to transfer his digital assets to their control, is scary stuff. Stay safe out there, folks.
Coinbase Data Ransomed: Coinbase was joined the list of victims of data breach with cyber criminals gaining access to certain Coinbase customer data through bribes to customer support representatives. Not great news the same week it was revealed the SEC is investigating certain IPO disclosures from years ago on user metrics.
CFTC Commissioner to Lead Blockchain Association: Commissioner Mersinger of the CFTC will be taking the role of Blockchain Association CEO after she steps down from her role at the CFTC at the end of this month. There was still three years left on her term, so her leaving to join one of the leading industry groups in the space is interesting timing with market structure bills expected to get heavy congressional attention in the upcoming months.
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.
The NFTtorney 