So, I missed posting my weekly update last week. Apologies for that. Not sure if you have been following the news, but Monday and Tuesday of last week were, what we call in the legal profession, a “shit show” in crypto law, so apologies again on forgetting to schedule my post for publication. The good news for you all, is you get a double dose of “Other Stories” this week to cover both last week and the week before!
To call last week tumultuous would be an understatement. First we got a new market structure bill from Senate Banking which reflected months of negotiations between Republicans and Democrats from the discussion draft released in September of 2025. Followed later by a last-minute markup cancelation with associated drama. And while all the market structure legislation drama was going down, there was a House Financial Services Committee hearing on innovation which touched on the Committee’s plans for digital assets this year, and Tether quietly froze hundreds of millions of $USDT on Tron.
Here’s everything that happened last week in crypto law:
Revised Market Structure Bill in Senate Banking Released
Prior to the scheduled (and later canceled) markup of the Senate Banking half of the Senate’s market structure legislation, the committee released a revised bill which was the product of months of negotiations between Democrats and Republicans with a ton of changes, including a new “Network Token” framework added on top of the existing “Ancillary Asset” framework from prior drafts. There was also a section on digital asset kiosks added, a section on decentralized physical infrastructure (“DePIN”) remove, a range of significant changes to DeFi provisions, and whole sections on how centralized digital asset service providers could interact with DeFi and self-hosted wallets.
Tl;dr– I will start with the good, and that is the “SEC Front Door” (while odd in how the CFTC and SEC historically interact) was limited. Title I as a whole, which is the meat on how entrepreneurs can raise money on token sales and when token sales are securities vs. commodities transactions, is solid. The Network Token/Ancillary Asset framework makes sense, and while the required disclosures for Ancillary Assets are overly burdensome as currently drafted, it is undeniably better for consumers than issuers simply being able to disclaim managerial efforts despite knowing people are relying on those efforts in their token purchases. The Blockchain Regulatory Certainty Act and Keep Your Coins Act both making it to the bill were huge dubs as well, as was 302(g) which protects users participating in DeFi governance and DeFi platforms having safeguards against security incidents. That said, there are a ton of issues elsewhere in the DeFi provisions, and if the stablecoin yield prohibition section removes (E), which allows for yield when providing stablecoins as liquidity, that’s unacceptable and unworkable. There is certainly more good than bad in the bill, but it also will need amendments or changes before it can get full industry support.
The Banking Market Structure Markup That Wasn’t
In the same week as new text was released (discussed above) there was another false start (hopefully 6th time is the charm!) in the Senate’s market structure bill markup plans. Prior to the planned markup, the committee released a series of fact sheets on how the bill effects everyday Americans, what it does for the digital asset industry, what it is designed to do re: DeFi, and how it cracks down on illicit finance. However, the day before the markup, Coinbase pulled its support of the bill, which resulted in a delay in markup that likely will not occur until February now (if at all) due to the Senate being out this week and Senate Ag. scheduling their markup the following week.
Tl;dr– The reasons for industry backlash against the bill which delayed markup are laid out in Brian Amstrong’s tweet as (1) a tokenized securities provisions in 505(e)(2) and (h)(3); (2) DeFi provisions, (assumedly 301, 302, 307(d) and 308); (3) what has been referred to as the “SEC Front Door” for token classification determinations; and (4) stablecoin rewards prohibitions (404 of the draft, but which was expected to be changed to eliminate subparts (b)(2)(B), (C), and (E) when Coinbase pulled its support). Of those, only the DeFi provisions and removal of 404(E) (and maybe (B) if it cuts off airdrops from stablecoin activity) represent existential risks to the industry, imo. And the DeFi provisions and problematic stablecoin yield provisions are fixable. While others disagree, I do not see any world where 505(h)(3) can be read to limit SEC authority on rulemaking for tokenized stocks. If you read those paragraphs that way, it would mean the other 277 pages of the bill which give the SEC broad rulemaking and exemptive authority (including section 505(f)(1)) are meaningless because the SEC cannot issue blockchain-specific rules since not all stocks are being tokenized for trading through blockchain tech. That would be an absurd result. The SEC Front Door is undeniably weird, but the reality is the SEC has staffing and resources the CFTC doesn’t and its powers are limited against a Gensler 2.0 abuse by Section 4B(a)(6)(B) and 105(a). It’s looking like the first week of February would be the next realistic chance at a markup, so hopefully this is just a bump in the road and not a roadblock to the process.
OTHER STORIES
House Financial Services Hearing: While focus this week was understandably on the Senate, the House Financial Services Committee also held a hearing which touched in crypto titled “Delivering for American Consumers: A Review of FinTech Innovations and Regulations.” The main takeaways are that we can expect the House to continue to focus on creating regulatory pathways for new technologies in existing financial markets, provided fit-for-purpose consumer protections are in place.
Senate Ag. Market Structure Updates: Senate Agriculture Chair Boozeman announced that that committee’s portion of digital asset market structure text will be released on this upcoming week on the 21st with markup to occur the following week on the 27th. Hopefully the delay resulted in bipartisan text that can pass committee on a bipartisan vote. But with the Banking markup delay, unclear how this changes Agriculture’s timeline.
Tether USDT Freeze: I probably would have overlooked this story if it hadn’t been mentioned on Dex in the City Pod (highly recommend, btw), but Tether recently froze $182 million in USDT on Tron across 5 wallets to comply with U.S. Treasury sanctions. Certainly an interesting development from what many consider the bad boys of stablecoins who are seemingly making an effort to overall clean up their reputation as their assets are increasingly implemented into traditional finance.
Stablecoin Interest Debate Continues: While Pat Toomey put out an op-ed in the Financial Times about while stablecoin holders shouldn’t be blocked from receiving interest on their holdings, Bank of America is claiming that would result in $6 trillion in outflows from banks using seemingly made up data they paid for and are claiming is coming from Treasury? Honestly, saying “don’t let consumers receive safe/free money from holding digital dollars because it creates competition” is a hard sell, so impressive banks have gotten traction on that position.
Visa Jumps on Stablecoins: That interest payment drama aside, Visa is going full steam ahead in implementing stablecoin payments into its settlement options. Which is a no-brainer for the payment giant if they want to stay a payment giant in the new world order.
UK Crypto Political Donations Debate: From our partners across the pond, there are currently efforts in the UK to ban on crypto donations to political parties. Big props for our partners at CryptoUK pushing back against this.
CFTC Innovation Advisory Pt. 2: Directly before she left, then-acting-Chair Pham created an Innovation Council to assist the agency as it moves towards a blockchain-enabled world. Now, Chair Selig is expanding on that work through an “Innovation Advisory Committee to gather expertise and recommendations on innovation in financial markets.” The more public/private working groups like this, the better, imo.
How to Change Your Life in 1 Day: I saw this Twitter article that has absolutely zero to do with crypto or law, but was impactful enough that I wanted to include it in my updates. With over 71 million views as of me writing this, it seems others found it impactful as well so maybe put it near the top of the pile of things that we all have been putting off reading.
Senate Judiciary Take Aim at Market Structure Provision: With the added time and markup delayed, Senate Judiciary leaders are given more time to advance their position that the Blockchain Regulatory Certainty Act which gives clarification on who much seek Money Services Business Licenses (an undeniably banking issue) belongs in their committee because of its criminal law implications for people who violate the law. This is why we can’t have nice things.
Keep ETH CyberPunk: ETH Creator Vitalik has been on a tear emphasizing the most important thing for ETH is to maintain credible neutrality and censorship resistance. Love to see it. As we have seen this week and elsewhere in the world, political winds shift and censors come from every jurisdiction. For ETH to survive, it needs to be above any particular government’s efforts to interfere.
BitMine In The Mr. Beast Business: Bitmine, which is primarily an ETH treasury company, has diversified with a $200 million stake in the Mr. Beast enterprises entity. Idk the motivation here, but trust in Tom Lee.
Another Crypto Company Returns: A few weeks ago it was Jito announcing their return to the states to build crypto in America, and now Algoraland is coming home as well! If we want companies to continue coming back to America and staying here, what we really need is certainty from market structure legislation.
New York Rug Pull: In “come on, really? This week of all weeks??” news, former New York Mayor Eric Adams launched an NYC token which almost immediately pumped and crashed. You know it was a crazy week when this was only like, the 4th worst thing to happen in crypto law this past week.
Is InfoFI Dead?: Twitter has revoked its API licenses to a variety of “InfoFi” apps which is just a tech way of saying “low quality spam posting reward bots” so while I am not sad to see them go, I wonder if this is a sign of their death or just the first bump before somebody finds a way to make it less transparently spammy.
ZCash SEC Investigation Ends: It is kinda crazy there was even still an ongoing SEC investigation into ZCash when it’s founder spoke at an SEC privacy roundtable a few weeks ago, but it appears the investigation has come to an official end, which is great news for the privacy-focused token.
OTHER STORIES (From last week. My bad. It was a busy week and I forgot to post!)
Morgan Stanley Crypto ETFs: Morgan Stanley is getting into the crypto ETF game with planned products for both Bitcoin and ETH to offer to their customers and plans for a digital wallet product. The ETH ETF including staking rewards is interesting to see vs. more vanilla simple holding ETFs. FinTech has been here for a while, and TradFi isn’t coming; it’s here.
MSCI Removes DAT Index Removal Plans: MSCI has reversed course and decided against (for now) a proposal which would have removed any company which maintains more than 50% of its balance sheets in crypto. Not to pat ourselves on our back too much, but advocacy efforts from The Digital Chamber and others were certainly a part of this rare proposal rejection when usually the notice/comment period on such proposals is a mere formality.
Coinbase on Stablecoin Yield: If you have been online, you have seen Coinbase is going on a full-court press to maintain the stablecoin yield language in the GENIUS Act. It is crazy this issue is still being so heavily litigated, but here we are.
World Liberty Bank: World Liberty Financial is the latest crypto company to apply for a banking license. As TradFi and crypto get more integrated, we are going to see a lot more of these types of applications or crypto companies acquiring entities with banking licenses to do the things on traditional financial rails they need to complement their crypto rails work.
Support Roman Storm: I highly encourage people to make their voices heard regarding support for the right to develop privacy preserving technologies. With wrench attacks on the rise and the very real physical threats that come with a lack of privacy (in addition to the Constitutional right to privacy being a core American ideal) fighting for privacy rights is more important than ever. Vitalk’s letter was especially well-put. You can read my personal letter here.
Mango Exploiter Acquittal Appealed: The decision that the Mango Markets exploiter, Avi Eisenberg, could not defraud software code, is being appealed. This is the same issue currently being litigated in the MEV Brothers case, so huge implications for this issue to be determined at the appellate level and the chance it creates binding precedent on this issue. Good place to add this view from a reporter who reported on many crypto cases this past year.
Politicians in Political Markets: There is some momentum for a bill which would ban federal elected officials from participating prediction markets. Most of these markets already ban individuals who could have an effect on their outcomes, so I don’t see the issue with this bill going forward if merely to prevent the appearance of impropriety.
Prediction Markets No-Action: The CFTC has issued another prediction market-related no action letter. Like the no action letters before, while it doesn’t directly hit on the hotly contested state law preemption issues, these types of actions indicate the CFTC continues to see itself as the regulator of prediction markets (and, if thy are the regulator, then their regulatory power is exclusive, with Tennessee being the latest to assert state law control over such markets).
Nike Sells RTFKT Brand: Nike has apparently sold its interest in NFT company RTFKT a month ago. Really interested to know the sale details, since it was reported that one of the reasons Nike purchased wasn’t just to be in NFTs but to protect their brand and IP for digital/physical sneaker combos.
Rumble Crypto Creator Payments: Streaming/video platform Rumble has launched its own wallet and integrations to allow fans to tip creators on the platform in stablecoins and Bitcoin. I can’t express enough how much I prefer this form of creator onboarding vs. “creator coins” being pushed on people when nobody wants them.
Bitcoin Mining Water Heater: This has absolutely nothing to do with crypto law, but this water heater that uses Bitcoin mining to heat the water is a pretty cool product I saw this week.
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 