It’s Conference Szn! There is Fordham Law Blockchain Regulatory Symposium on Monday, Predict Tuesday and Wednesday, and The Digital Chamber Signal Forum in Chicago on Thursday. But in last week’s news, Illinois has agreed to delay the implementation of their Digital Asset Tax while the SEC and CFTC continue to move forward with their digital asset and innovation rulemaking priorities.
Here’s everything that happened in Crypto Law last week:
Illinois Delays Digital Asset Tax Implementation Date
The state of Illinois has agreed to delay the effective date and implementation of the Digital Asset Tax which passed through the state legislator earlier this year after the text was added in the final day of the legislative session in the early hours of the morning. This allows firms operating with potential digital asset activities or digital asset customers in the state of Illinois to have some breathing room while The Digital Chamber, Illinois Blockchain Association, and others pursue their lawsuits to overturn the law for good.
Tl;dr– This is a huge early win and allows the digital asset industry to move towards a challenge of the lawsuit on the merits vs. fighting over injunction issues and forcing firms operating in the space to guess how to plan for this tax taking effect even while the constitutionality of the tax is being challenged. There is still a long way to go to get this overturned for good, but this is a great early win worth celebrating.
OTHER STORIES
SEC Releases Crypto Custody Updates: This custody update from the SEC is both massive and boring at the same time. With Reg. Crypto trying to make initial coin offerings (ICOs) viable, there needs to be entities capable of holding those coins. This solves that issue.
Blast Shuts Down: Blast shutting down feels like the end of an era. For a while, it seemed like there was a new Layer-2 that people were farming for airdrops every other week. With Ethereum on a mission to make mainnet great again, I wonder how many L2’s that never found fit outside of airdrop farmers sticks around.
Event Contract Rules Coming: Less than a week after the 6th Circuit ruled event contracts based out the outcome of sporting events are not swaps, the CFTC has sent rules to the Presidential counsel review that would define swaps. This is a Loper Bright law school fact pattern waiting to happen.
Memecoin Plaintiffs Take L: Claiming memecoins are securities or creating memecoins are racketeering schemes are silly. I have never been a fan of memecoins, but there is a no crying in the casino element to people that choose to engage with them. Great job by the defense on this matter. Another lawsuit regarding the Magic Eden token drop was also dismissed last week so bad time to be a crypto ambulance chaser.
Prediction Market Dub: It isn’t shocking that a Court in the home of derivatives, Chicago, got its prediction market ruling right with the bar at the end “Many of the financial instruments at issue are likely swaps as defined by the Commodity Exchange Act—they just happen to be swaps that people find entertaining and fun.” Boom.
Community Bank Advocacy Org Sues OCC: Banking advocacy organizations continue to not represent their members interest by pushing for regulatory capture over upgrading technologies which allow smaller banks to compete with the biggest banks. Yet another own-goal, but they got some pretty solid attorneys to represent them in this recent lawsuit.
UK Opens Crypto Firm Registration: The UK’s Financial Conduct Authority (“FCA”) has opened up its specialty crypto firm registration process. While Clarity Act not passing is a bummer for the U.S., the rest of the world will move forward with or without us.
MiCA Consultation Deadline: The deadline to respond to the EU’s consultation on MiCA as it considers MiCA 2.0 has passed, and The Digital Chamber and CryptoUK have submitted a joint response as did DeFi Education Fund and Hyperliquid Policy Center. All the responses focused on applying regulatory standard to firms capable of complying and not trying to regulate the decentralized applications and protocols which those regulated firms interact with.
CONCLUSION
If you have any questions or would like me to write about anything else, let me know on Twitter (X?) or Farcaster. Any typos or errors are intentional to prove I am not AI. 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.
