As expected, September started with a bang with the Senate Banking Committee releasing their updated draft market structure legislative text, and the SEC and CFTC releasing various joint statements regarding agency priorities in digital asset regulation. There were also more details on the Stripe payment processing layer-1 blockchain, and prediction markets had a big week with Polymarket getting approval for U.S. operations and the effect of prediction markets in sports wagering taking shape in the start of the NFL season.
Here’s everything that happened last week in Web3 legal:
Senate Releases Market Structure Draft Bill
Before the August recess, the Senate Banking Committee released a discussion draft market structure bill with accompanying request for comments. Polsinelli assisted with the Digital Chamber’s response to those comment requests. Back from break, the Senate has now taken in those comments and released and updated draft titled the Responsible Financial Innovation Act, which is what Senate Banking Chair Tim Scott will try to advance through committee this month to stay on the fast pace schedule which congressional and executive branch leadership is aiming for. While still waiting for the Senate Agriculture Committee’s companion draft to deal with many CFTC-related issues, Senate Banking will need to schedule a hearing in the near future on this revised draft to try to stay on schedule for any chance of passing in 2025.
Tl;dr– The big question was whether the Senate’s bill would revert to the CLARITY Act’s control-based/decentralization test (which passed the House in an overwhelming vote of 294-134) to determine if the sales of certain digital assets would be securities transactions, vs. the Senate’s bill which created the “ancillary asset” concept to determine when a transaction involving digital assets constitutes a securities transaction. That question was answered, as the current draft maintains the ancillary asset framework with some fairly important changes. The biggest industry win in the revised draft has to be the increased protection for developers of non-custodial software tech which was something advocated for by over 100 industry participants and spearheaded by the DeFi Education Fund. From an initial review, it appears that the draft implemented many of the modifications requested by industry comments, but at 182 pages it is expected to have areas which still need improvement.
SEC and CFTC Release Joint Statements Regarding Crypto Issues
The SEC and CFTC released a joint statement clarifying the views of staff at both agencies that “SEC- and CFTC- registered exchanges are not prohibited from facilitating the trading of certain spot commodity products.” One large hold up in existing digital asset exchanges having the capabilities of facilitating the sale of tokenized securities is how exchanges would be permitted to sell or accept as payments non-securities (like $USDC or $BTC) alongside tokenized securities. This appears to be the first step in overcoming that hurdle. A few days later, CFTC Acting Chair Pham and SEC Chair Atkins released a joint statement with the subtitle “Next Steps – Bringing Novel and Innovative Products Back to America.”
Tl;dr– The Commodity Exchange Act already allows off-exchange retail commodity transactions for certain assets, so it is unclear how much the spot trading statement will functionally change things. Still, it is an important stacking of public policy statements and clarifications including the follow up statement on reshoring innovative businesses. The follow up statements on how to bring novel financial products back onshore was the more important statement. All of the listed areas of focus (24/7 markets, Perps, Event Contracts, DeFi, and Portfolio Composition Requirements) directly implicate crypto or are areas which benefit from blockchain ledger technology rails, so good things on the horizon it seems. It also means the policy work done in the next 12-18 months could shape U.S. financial markets for decades to come. So, no pressure. Just don’t mess this up.
SEC Releases Rulemaking Agenda Including Crypto Rulemaking Preview
The SEC’s Office of Information and Regulatory Affairs released the Spring 2025 Unified Agenda of Regulatory and Deregulatory Actions which Chair Atkins described as covering “rule proposals related to the offer and sale of crypto assets to help clarify the regulatory framework for crypto assets and provide greater certainty to the market” as well as “withdrawal of a host of items from the last Administration that do not align with the goal that regulation should be smart, effective, and appropriately tailored within the confines of our statutory authority.”
Tl;dr– While the market structure legislation efforts are ongoing in the Senate, the SEC has clearly signaled that it intends to move forward with crypto-related rulemaking efforts without waiting on the outcomes of those legislative efforts. The proposed rule changes including many areas which can be expected to impact crypto (such as revised definition of “Dealer” and Rule 144 Safe Harbor changes) and 5 agenda items that directly mention crypto which are: (1) Crypto Assets; (2) Amendments to the Custody Rules; (3) Transfer Agents; (4) Amendments to Broker-Dealer Financial Responsibility and Recordkeeping and Reporting Rules; and (5) Crypto Market Structure Amendments. Very little detail at this point, but a step in the right direction and a forecast of what is to come in the next 6-12 months.
OTHER STORIES
Sports Prediction Markets: Prediction markets and stablecoins are probably the two use cases most people would point to in 2025 as gaining the most steam this year. So it isn’t shocking to see prediction markets coming for sports gambling market share as well.
Polymarket No Action: Speaking of prediction markets, Polymarket will be available to U.S. consumers after the CFTC issued a no-action letter which allows Polymarket to offer event contracts without reporting the data required under US financial regulations.
Crypto Funding Stays Hot: Crypto companies have raised over $16 billion this year from venture, which is on pace to beat the funding record from 2021 when companies in the space raised over $29 billion. This comes as Figure and Gemini both are looking to go public in the near term and M&A in the space is hotter than ever. I also am a big fan of the various onchain accreditation verification services being spun up.
WLFI Goes Live: The token for Trump-backed World Liberty Financials’ token went live for trading at around a $5.5 billion market cap. I get they pivoted into a quasi-DAT company with a stablecoin as well, but I just don’t see how what started as an AAVE front-end is worth more than AAVE itself? Good for all the initial purchasers, though. I do think this unfortunately makes it harder to pass market structure legislation in the Senate with this making news like this directly beforehand.
WLFI/Justin Sun Drama: Also making waves was Justin Sun getting his WLFI tokens frozen due to allegations of price manipulation. I have no idea who is in the right on this one, but also neither side is an especially sympathetic figure in these types of business disputes, so it will either be worked out behind the scenes or there will be litigation.
Crypto Influencer #Ads: ZachXBT released a list of 100+ crypto social media accounts that charged for promotions that largely failed to disclose those promotions. Mark my words: some of these people are going to get targeted by the FTC, state regulators, and private litigants in the next 6-12 months.
Uniswap DAO Tax/Structure Letter: Uniswap sent a letter to the Department of Treasury advocating for changes or clarifications needed for the operation of DAOs in the United States. I have seen enough tax nerds argue about this issue, that even as a non-tax nerd myself I understand there are some issues which are confusing and could benefit from guidance when even the smarted crypto-tax people I know argue about it.
Nike and StockX Settled NFT Lawsuit: Nike and StockX reached a confidential settlement ahead of trial in Nike’s case against the reseller regarding sale of counterfeit sneakers and trademark use for sneaker-linked NFTs. I do think we see more of these, as RWA tokenization blends fair use to describe the item tokenized and the trademark rights of the original seller.
Bitcoin Supply Chain Law Review Article: This isn’t really my area so I doubt I add this to my already impossibly long reading list, but I respect the authors so it is worth adding here this recent article which uses Bitcoin in a case study on the interplay between supply chain resilience and national security/supply chain risks.
Fed Conference on Payments Innovation: The Federal Reserve is hosting a conference on “payments innovation” which is crazy to think that less than a year ago we were in the throes of Operation ChokePoint 2.0 and now the Fed is actively bringing together crypto leaders to figure out how to integrate it into the financial system.
Stocks Onchain: Galaxy is giving people the option to self-custody their shares of Galaxy Digital Inc. (Nasdaq: GLXY) onchain in whitelisted wallets, which is p neat. Combined with Coinbase rolling out a tokenized Mag7 index, and we are getting closer and closer to being able to use a self-custody wallet to day trade.
Stripe Stablecoins L1 Update: As previously covered, Stripe is building out their stablecoin infrastructure with the acquisition of Bridge (stablecoin infrastructure provider) and Privy (software wallet provider). It was announced in August that Stripe would be building their own stablecoin-focused L1, and more details on that were released this week with the chain named Tempo and a private testnet seemingly functional. Like I said before, just as companies starting to use internal intranets sped up proliferation of the internet, companies creating (assumedly/initially) closed L1s will speed up proliferation of decentralized blockchain usage. Which is a win/win.
Crypto Treasury Companies Update: Nasdaq ramped up its digital asset treasury company supervision, so seems like at least Nasdaq’s priorities are elsewhere vs. facilitating spot crypto sales. I can see the rational, though, as these are relatively new business models that likely raise some eyebrows amongst traditional firms.
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 