Ethereum turned 10 years old last week, and the network has had many different upgrades over the years with zero downtime, which is an amazing technical feat. And Ethereum’s birthday week was a BUSY one. Between the Chair of the SEC announcing his intent to bring all American capital markets onchain through “Project Crypto” and the President’s working group releasing a 166 page report which they are touting as the blueprint to make America the undisputed leader in digital assets, it was a huge week for crypto law. That’s not even counting some major developments in criminal matters in the space.
Note: I will cover the Tornado Cash decision in the next update since the jury didn’t come back last week.
Here’s everything that happened last week in Web3 legal:
SEC Chair Announces “Project Crypto” in Speech
In a recent speech from SEC Chair Paul Atkins, it was announced that the SEC would be launching an effort titled “Project Crypto” which Chair Atkins described as “a Commission-wide initiative to modernize securities rules and regulations to enable America’s financial markets to move on-chain.” Project Crypto includes, among other things: (1) attempts to “onshore” crypto through creation of a regulatory framework for distribution of crypto assets in America; (2) create a framework for tokenized stocks, bonds, partnership interests, and other securities; (3) modernize the custody rules for registered intermediaries; (4) allow broker-dealers with alternative trading systems to offer trading of non-security assets alongside security assets, and provide other services like staking and lending (potentially dubbed “Reg Super-App”); (5) integrate decentralized finance (“DeFi”) and other forms of on-chain software systems into American securities markets; and (6) create an “innovation exemption” regime to allow go to market without being required to comply with “incompatible or burdensome prescriptive regulatory requirements” so long as they comply with certain principles-based conditions “designed to achieve the core policy aims of the federal securities laws.”
Tl;dr– It would be hard to overstate how groundbreaking this development could be. Not since the 1960s “paperwork crisis” and the series of complex clearing and settlement systems which were enacted to deal with that crisis have such sweeping reforms been proposed. It is worth noting that the statement starts off by stating the “SEC must holistically consider the potential benefits and risks of moving our markets from an off-chain environment to an on-chain one” (emphasis added) meaning none of the above six goals are set in stone. Still, even a partial modernization of the American financial system on blockchain technology rails would constitute a monumental shift in financial markets and potentially displace entirely the heavily intermediated system which may no longer be necessary due to technological advances.
The President’s Working Group on Digital Assets Releases Initial Report
When President Trump took office, one of his initial actions was releasing an Executive Order titled Strengthening American Leadership in Digital Financial Technology. That Executive Order established the President’s Working Group on Digital Asset Markets (“Working Group”) with directions for that Working Group to submit a report recommending regulatory and legislative proposals that advance the policies established in the Executive Order within 180 days. The Working Group’s 166 page report was released last week, and is available here along with a fact sheet summary here.
Tl;dr– Other than the DOJ (discussed below) all areas of the executive branch are marching in unison in trying to position the U.S. as the crypto capital of the world. I might try to do a full section-by-section breakdown of the report, but some interesting tidbits from my initial scanning are as follows. (1) It looks like the Executive prefers building on the CLARITY Act vs. what was included in the Senate Banking market structure discussion draft bill. (2) It has an interesting discussion in pages 104 through 112 about the difficulties and recommendations as to how to apply BSA type of reporting requirements on DeFi. (3) It recognizes that tax reporting is a problem, and directs the IRS to make tailored rules so people have a better understanding of their tax liabilities/make it easier to track those tax liabilities. The report as a whole is comprehensive and seemingly prepared by people who have a solid understanding of the underlying technology, and has a helpful chart at the end with a roadmap of what to expect to be pushed to agencies for action vs. what the Executive is looking to Congress to do.
OpenSea “Insider Trading” Conviction Overturned on Appeals
The former employee (Nate Chastain) of NFT marketplace Opensea had his conviction overturned on appeal last week in what was dubbed at the time the “First Ever ‘Digital Asset Insider Trading’ Scheme.” The Second Circuit ruled that the district court improperly instructed the jury that Nate could be convicted if his actions were unethical alone, even if his employer did not treat the information he traded on as confidential and did not represent a property interest of his employer. “[W]e cannot say that the jury would have reached the same verdict if it had been properly instructed that fraud requires appropriation of a property interest rather than unprofessional business conduct.”
Tl;dr– The Nate conviction never sat right with me, so glad to see it overturned. What he did was certainly unethical and he deservedly lost his job and likely millions of dollars in equity as an early employee in the Unicorn that Opensea would become as a result of his actions. But seemed more like a dumb mistake from a guy in his early 20s that didn’t know any better than criminal fraud. Hopefully this will be the end of the matter, but the DOJ could choose to take the case to a second trial, which would be disappointing.
OTHER STORIES
CFTC Chair Vote Held Up: The vote to advance Brian Quintenz’s nomination to be the Chair of the CFTC has been held up a few times now. The first time, it was blamed on travel issues for some Senators expected to vote yes, but now there are reports that certain crypto lobbying groups are having second thoughts? Whoever takes the role may be the sole CFTC Commissioner for a stretch, due to other Commissioners resigning or set to resign shortly.
Coinbase “Everything Exchange” Plan: Shortly after the Chair’s statement on “Project Crypto” Coinbase unveiled its plan to be an “everything exchange” where users can access prediction markets, crypto exchange services, and tokenized stock offerings. Ambitious for sure, but they have the infrastructure to get it done, regulation permitting.
Hyperliquid Goes Down: Hyperliquid got to the “break things” part of move fast and break things when it briefly went down last week. The perps exchange giant not available in the U.S. has actually weathered its minor controversies well which for something of its size is impressive.
PayPal Crypto Expansion Continues: Two weeks ago, it was enabling ENS domain transfers, now PayPal is allowing for payments in over 100 cryptocurrencies and conversion to stables for businesses. More FinTech embracing and enabling crypto is how we get a billion people onchain.
Tether Still Printing Money: Tether, the issuer of the largest stablecoin by market cap $USDT, announced $4.9 billion in profits in the second quarter of 2025. With three years to come into compliance of the GENIUS Act, Tether is just an insane success story.
Euler DAO Fee Changes: Euler (pronounced, “oil-ler” I learned) lending protocol is upping lending fees to stock up the DAO’s war chest. It is one of the few major lending platforms I haven’t tried, and have been meaning to, so this is mostly just a reminder to myself when I am editing this later to spend some time playing around on the platform.
Adapt or Die, TradFi: Loved this piece in the American Banker from some of the Franklin Templeton folks warning “legacy institutions that fail to embrace [blockchain-driven innovation] risk losing out on immense opportunities for their customers.” The time is now, old man!
SEC Greenlights In-Kind Redemptions: Crypto ETF purchasers will be able to buy and sell their ETFs in the native assets tracked by the financial product. I am sure this is a big deal for people who want to hold their crypto in ETFs and is generally cool embracing of innovation from the SEC, but doesn’t move the needle for me personally.
Samurai Wallet Developers Plead Guilty: Samurai Wallet developers Keonne Rodriguez and William Hill plead guilty to unlicensed money transmission conspiracy charges, in exchange for dropping the money laundering conspiracy charges. They entered their plea a day ahead of the jury’s findings in Tornado, with both sides seemingly recognizing the outcome of that case would be significant in the outcome in this related but separate case.
Venture Firm Pushes Back Against Senate Discussion Draft: a16z has responded to the Senate’s discussion draft and related list of questions by essentially saying “go back to CLARITY Act and stop trying to reinvent the wheel.” Hard to disagree with all the work and bipartisan support that went into CLARITY for the Senate to come in and try to start over last minute (also worth reading the DeFi Education Fund submission), but with the big egos involved it is unclear which side will win the day.
CONCLUSION
If you have any questions or would like me to write about anything else, let me know on Twitter (X?) or Farcaster. 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 