Off the Blockchain+, September 29-October 6, 2025

I have been posting these weekly crypto legal updates since January of 2023 without missing a week. My master tracking document is now 444 pages and almost 200,000 words. It has been awesome, and I am very thankful for all the subscribers and readers who have reached out to give suggestions to improve the updates or just otherwise given me encouragement throughout the journey.

Next week, I will likely take my first break in almost 3 years from the weekly updates for a different kind of update. Until then, in crypto law news, the SEC and CFTC continued their efforts to create digital asset rules and regulations at the administrative level including through a joint roundtable to discuss the dangers of creating a “turf war” and duplicative or conflicting rules amongst the agencies. The SEC also issued its most substantial no-action relief in years regarding distribution of tokens as a part of a decentralized infrastructure project.

Here’s everything that happened last week in crypto law:

SEC and CFTC Hold Joint Roundtable Discussions on Regulatory Harmonization Efforts

The SEC and CFTC held a series of roundtable discussions between various financial industry representatives to discuss how to encourage coordination between the agencies especially in regards to innovative products and services such as those enabled through blockchain technologies. The Commissioners’ various statements (including SEC Chair Atkins, CFTC Acting-Chair Pham, SEC Commissioner Peirce, and SEC Commissioner Uyeda) all emphasized a need to put regulatory missions over regulatory turf wars to ease compliance obligations on market participants and better serve the public.

Tl;dr– This was one of the more productive conversations from these roundtables, as old-guard and new-guard were often on panels together to discuss what should be done at the agencies to address new technologies without providing regulatory moats for either old or new entrants. It resulted in at least one humorous moment where Polymarket founder Shayne Coplan received a playful middle finger from SME Group CEO Terrence Duffy after he effectively called Duffy a technological philistine. That moment did seemingly provide a theme of discussions, though, as the views on exemptions and regulatory sandboxes seemed to be largely dictated by whether the speaker represented an old-guard institution (largely anti-exemptions) or new entry (largely pro-exemptions). Also, need to give credit where credit is due to Commissioner Peirce for her speech’s “[f]or sports-related complaints, please call the CFTC” quip which was hilarious for a crowd that included predictive markets which are currently fighting with regulators on if sports prediction markets are governed by the CFTC or state gaming regulators or both.

SEC Issues DePIN Token No Action Relief

The SEC has issued No Action relief to decentralized physical infrastructure (“DePIN”) developer DoubleZero regarding the planned distribution and use cases for a planned “2Z” token. This is the first formal No Action relief given to a digital asset project since the Pocketful of Quarters No Action relief from 2019. While not binding for any other project, this gives a framework for what the SEC currently considers to be outside the scope of federal securities laws in regards to the distribution of tokens in a DePIN project. Importantly, it was noted that “2Z is specifically designed to exclude any passive value accrual mechanisms—it does not incorporate dividends, a deflationary token supply, programmatic buybacks, or any similar functionality.”  

Tl;dr– The requested/granted relief is limited to “Programmatic Transfers” of 2Z to “Network Providers” and “Resource Providers” as compensation for their own services; not prior transactions or speculative sales (which did occur, but under securities laws exemptions). So this isn’t a far leap, as it seemingly is just stating what prior statements and guidance from the current SEC commissioners and staff have said that the mere existence of transferability or a secondary/speculative market doesn’t make a token itself a security. But it does interestingly rely on a consumptive use/utility argument a-la United Housing v. Forman which had largely been rejected by courts in prior token cases like LBRY. This was a huge effort by both agency staff and the project’s team and lawyers to get this done, and shows a real willingness at the current SEC to understand the underlying technology and provide guidance consistent with that technology, which is great to see.

OTHER STORIES

NYC Crypto Regulator Steps Down: Adrienne Harris is stepping down from her role as Superintendent of the New York Department of Financial Services. Unlike the New York Attorney General (who is known in the crypto industry for being a part of the lawsuit that alleged ETH was a security, among other things), Adrienne Harris was seen as pro-crypto (for New York, at least) so she leaves a gap that will hopefully be filled by a similarly pro-tech replacement.

More SEC No Action Relief: The SEC Division of Investment Management has also issued No Action relief regarding use of state-chartered trust companies as qualified custodians for crypto assets. This relief was necessary to give investment advisers and registered funds comfort that they can use a state trust company to custody crypto assets. Great to see.

Monkey Jpgs. Aren’t Securities: Yuga Labs fended off a proposed class action alleging Yuga Labs’ digital assets (NFTs and ApeCoin) were unregistered securities. In dismissing the claims, the Court ruled “the fact defendants promised that NFTs would confer future, as opposed to immediate, consumptive benefits does not alone transmute those benefits from consumptive to investment-like in nature.” Something for litigators to save away for a rainy day in the inevitable state securities lawsuits even if market structure passes this year.

CFTC Chair Nomination Dropped: The Whitehouse made it official that Brian Quintenz will not be the next Chair of the CFTC. The writing was on the wall after the never-ending confirmation process, but still disappointing to see as Brian seemed to have a true understanding of crypto and would have been a good steward over the agency as it modernizes rules. That said, a current front runner is Mike Selig, who was almost certainly the main SEC force behind the above discussed No Action letter and would be an excellent choice as well.

Senate Finance Hearing on Digital Asset Tax: Despite the government shutdown, the Senate Finance Committee held a hearing to discuss the taxation of digital assets. This is going to be a huge topic which isn’t as sexy as market structure but could be equally important. Despite what some Senators say (*Cough* Sen. Warren *Cough*) crypto users aren’t asking for special rules, but rather rules that are functional with the technology and parity with traditional finance. “Americans should not need a tax accountant to buy a cup of coffee [with crypto].”

DeFi Mullet: Crypto.com has become the latest centralized exchange to make DeFi lending (powered by Morpho) available to its customers. This is going to be a huge thing this year, as centralized platforms abstract away the scary technical parts of DeFi while allowing users access to these products and software services.

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.