After a brief break in coverage as I transitioned to my new role with the Digital Chamber, the weekly legal updates are back! As provided in the disclaimer at the end, any views or opinions provided in these updates are the views of me and me alone, and not the view of the Digital Chamber or any of its members. As shown thorough the FREQUENT typos in these blogs, this is just me putting my thoughts out for anybody interested and not intended to drive policy or be relied upon as legal advice.
In crypto law news, big focus this past week were the meetings with leaders from both parties in the Senate and crypto executives to try to get market structure legislation done. After the leaked Democrat proposal which would have DeFi killing effect if implemented, the meetings started tense but there was reportedly progress on both sides. Additionally, a16z put out their annual State of Crypto report which is a must read every year, and there is a new CFTC Chair nominee.
Here’s everything that happened last week in crypto law:
Senate Democrats and Republicans Hold Closed Door Meetings on Market Structure
Senate Democrats (including Gillibrand, Schumer, Warner, Hickenlooper, Booker, Lujan, Gallego, Blunt Rochester, Cortez Masto, Alsobrooks, and Kim) held a roundtable discussion with crypto industry leaders which was followed shortly thereafter by a meeting with many of those same leaders with Senate Republicans, led by Senators Scott and Lummis. Both meetings were seemingly designed to find a way to move market structure legislation forward, even as the government entered week four of its shutdown.
Tl;dr– The meeting with Democrats reportedly had some tense moments with Senator Gallego in particular noting his frustration at the leaked DeFi proposal and warning participants not to just be mouthpieces for Republicans. But after people let out some frustration, reports indicate it was a productive meeting following by a productive meeting with Republicans. With the government shutdown still ongoing, it is going to be tough to get market structure passed this year as Congress focuses elsewhere, but it at least looks like both parties are trying to find a way to get a piece of legislation together that can pass the 60-vote threshold needed in the Senate.
OTHER STORIES
New CFTC Chair Nominee: Mike Selig has been nominated to be the next Chair of the CFTC. He previously served as advisor to CFTC Chair Chris Giancarlo and more recently has been a leader in the SEC’s Crypto Task Force, so he is a great choice for the role and will have a lot of work to do if confirmed.
Stripe’s Stablecoin Blockchain Update: Tempo, the blockchain being developed by Stripe and Paradigm specific to payment processing, raised a half billion dollars at a $5 billion valuation without even being out of test net, and landed ETH core developer Dankrad Feist the same week. Not a bad week.
ANPR Submissions: L-1 blockchain Plasma submitted its response to the Department of the Treasury’s advanced notice of proposed rulemaking around GENIUS Act implementation. As expected, it focuses on Plasma vs. the industry writ large but it is well written as both Rodrigo and Jason (the attorneys listed as authors) are extremely respected attorneys in the space.
Litigation Tracker: Morison Cohen has put out their updated crypto litigation tracker which allows for sorting based on court/year/cause of action and has improved searching functionality. It is a fantastic resource.
Staked ETH ETF: Following the JitoSOL ETF application and supporting policy paper, there is now an ETF application for the Lido liquid staking token stETH. This seems to make the most sense from my limited understanding of the tax rules for ETFs if the tokens were staked in a non-rebasing way which would increase total underlying tokens under management for the ETFs instead of just having the tokens accrue value via staking.
Coinbase AML Memo: Coinbase submitted a policy proposal on overhauling the BSA to modernize illicit finance tracking. I have said it before and I’ll say it again. The BSA’s $10,000 threshold from 1970 (which hasn’t changed) would be ~$85,000 in 2025 dollars. Douglas was on point in his dissent in California Bankers Ass’n. MakeTheFourthAmendmentGreatAgain. Coin Center put out their comment too which was predictably spicy but might play? So did Paradigm/DeFi Education Fund/Solana Policy Institute.
Return of Up Only: Up Only was one of the best crypto streams/content in 2020/2021 and brought us the wonderful moment where Martin Shkreli told Do Kwon jail wasn’t that bad on live stream while Do Kwon thought he might avoid jail. Cobie got tired of people asking when he would bring the pod back so he said for an absurd amount ($25 million) he would do 8 episodes thinking nobody would be that dumb. But I am exceedingly happy Coinbase was in fact that dumb (or genius) because 8 more episodes in the crypto-twitter Super Bowl. W’s in the chat.
Coinbase Purchases Echo: Shortly after the Up Only announcement, it was also announced Coinbase was buying Cobie’s ICO/crypto crowd funding site Echo for a combined $400 million with its Up Only purchase. Rival exchange Kraken has Legion, so this might be a bit of keeping up with the Joneses for the Super App goals. But great marketing by Coinbase either way.
“Skinny” Master Account Access: During the Fed’s Payments Innovation Conference, Federal Reserve Governor Christopher Waller proposed allowing for expanding Master Account access with some added limitations around interest and overdraft privileges which “would provide access to the Federal Reserve payment rails while controlling for various risks to the Federal Reserve and the payment system.” Huge development. Also, it is worth watching the Franklin Templeton/Blackrock panel at the end which I thought was great.
A16z State of Crypto Report: a16z dropped their annual state of crypto report, which is a must read every year. Some big takeaways are there are that there are roughly 40-70 million active crypto users (up 10+ million from last year), and that stablecoins now power $46 trillion ($9 trillion adjusted) in annual transactions, rivaling Visa and PayPal. This is one of those things when businesses who weren’t in crypto approached me at my firm, I would pull stats from this or send their decision makers this document after I gave the crypto 101 talk.
Crypto Seizure Update: Not sure if this is related to the pig butchering seizure I covered last week, but this USDT seizure lawsuit is wild. It involves 144 scam accounts through OKX exchange which were used to offramp an average of to $8 million dollars a day! They were able to link the criminals to IC3 FBI reports, so hopefully some of these funds can be returned to scammed users.
Memecoin Class Action Update: The memecoin securities class action filed in the wake of the LIBRA crash has a request to amend to add allegations against Meteora co-founder Ben Chow. I believe Mr. Chow has already been dismissed once and this law firm pursing the action (Burwick) is a joke, but worth an update.
NHL Prediction Market Deal: The NHL has reached a deal with both Polymarket and Kalshi for promotion of NHL prediction markets. But prediction markets on sports outcomes aren’t gambling, right? Right??
CFTC Tokenized Collateral: Acting CFTC Chair Pham said it is her intention for the agency to permit tokenized collateral by the end of the year. So looking forward to all the comments on tokenized collateral set to be submitted by the deadline in about a month.
CZ Pardon: President Trump issued a pardon to Binance’s founder and former CEO, CZ, who pled guilty last year to one non-fraud Bank Secrecy Act charge. I am not sure why he pushed for a pardon, as a non-U.S. citizen who has already served his time and isn’t exactly hurting for employment due to the felony record, but it was always a politically driven conviction, so I am glad he got his pardon.
Polymarket Token Coming: The Polymarket CMO has confirmed that the prediction market intends to release a native token at some point. Now I just need to take out a position on Polymarket on when the Polymarket token will drop so I can farm points for that Polymarket token.
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: In late 2022, while I was at Polsinelli, I started preparing weekly updates for attorneys at the firm to stay abreast of the latest Web3 legal developments. I now 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 are solely my own. They do not reflect the official stance or endorsement of the Digital Chamber or any of its members.
The NFTtorney 