Non-Fungible Insights: Blockchain Decrypted

David Sacks, the White House Crypto Czar, led a joint press conference with key congressional leaders to provide insight into a bipartisan roadmap for digital asset legislation, ushering in the “Golden Age” of digital assets. Sacks emphasized the need for domestic innovation, regulatory clarity, and a move away from the prosecution and persecution of the digital assets industry. Sacks’ objective is to collaborate with the executive branch working group for digital assets and the SEC’s Crypto Task Force to accomplish the task that President Trump assigned in his Executive Order regarding digital assets.

On January 21, 2025, the SEC’s Acting Chairman, Mark T. Uyeda, announced the formation of an SEC Crypto Task Force (CTF) led by Commissioner Hester Peirce. On February 4, 2025, Peirce laid out 10 of the CTF’s top priorities, which are not exhaustive, nor are they presented in order of priority or order of expected completion. Overall, the focus of the CTF is to take a new approach to regulating digital assets and create clear and practical policy measures geared towards innovation.

On January 23, 2025, President Trump signed an Executive Order (EO) on digital assets, blockchain technology, “and related technologies across all sectors of the economy,” demonstrating a dramatic shift in tone and approach from the Biden Administration. On the same day, the Securities and Exchange Commission (SEC) rescinded Staff Accounting Bulletin (SAB) No. 121 (SAB 121), removing a major impediment to financial institutions offering digital asset services.

The Third Circuit Court of Appeals held that the SEC’s denial of Coinbase’s petition for rulemaking clarifying how and when federal securities laws apply to digital assets was arbitrary and capricious. The Court ordered the SEC to provide a more complete explanation for its denial of the petition.

On November 18, 2024, in Samuels v. Lido DAO, the United States District Court for the Northern District of California denied some defendants’ motions to dismiss, finding that the plaintiff sufficiently alleged that a decentralized autonomous organization (DAO) is a partnership under California law, and consequently that these defendants may be liable as general partners. The court relied chiefly on the plaintiff’s argument that these defendants “meaningfully participated” in the DAO’s governance.

The Fifth Circuit Court of Appeals held that Tornado Cash’s immutable smart contracts are not the “property” of a foreign national or entity, meaning smart contracts cannot be blocked under the International Emergency Economic Powers Act (IEEPA) and OFAC overstepped its authority in sanctioning Tornado Cash.

On November 21, 2024, a federal court vacated a controversial SEC rule that expanded the definition of securities “dealer” in a way that could encompass participants in DeFi protocols, finding that the agency had overstepped its legal authority.

Regulatory uncertainty has haunted the digital asset space since its inception. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been engaged in a multi-year turf war over which agency has the power to regulate various aspects of digital assets.

On July 17, 2024, the Financial Services and Treasury Bureau (FSTB) and Hong Kong Monetary Authority (HKMA) jointly issued a legislative proposal on stablecoin regulation in response to a two-month public consultation period with industry stakeholders. The consultation—which began earlier this year—generated 108 responses from market participants, industry associations, business organizations, and individuals, many of whom expressed support for a “well-regulated environment” as “a prerequisite for sustainable and responsible development of the stablecoin ecosystem in Hong Kong.”

On February 16, 2024, the Cabinet of Japan approved a bill to amend, among three other laws, the Limited Partnership Act for Investment (the Act). The proposed amendment provides for crypto assets to be added to the list of assets that investment limited partnerships (LPs) can acquire or hold.

On February 7, 2024, the Securities and Exchange Commission (SEC) announced charges against TradeStation Crypto, Inc. for “failing to register the offer and sale of a crypto lending product” that it offered to U.S. investors from approximately August 2020 to June 2022.

Winston’s “NFT Litigation and Regulatory Proceedings Tracker” on Lexis+ provides timely updates on significant litigation and administration proceedings involving NFTs brought by U.S. regulatory agencies and private litigants.

Yesterday marked a historic milestone in the history of bitcoin. On January 10, 2024, the U.S. Securities and Exchange Commission declared effective the applications to list shares of the following 11 spot bitcoin exchange-traded products and greenlighted the commencement of trading shares of the spot bitcoin ETPs beginning today.

Although the U.S. Securities and Exchange Commission in 2022 approved two exchange-traded funds (ETF) holding bitcoin futures, the Commission has rejected several efforts to list bitcoin spot ETFs.

On August 10, 2023, French securities regulator Autorité des marchés financiers (AMF) published a press release announcing amendments to Book VII of its General Regulation as it relates to digital assets service providers (DASPs) to be consistent with the enhanced registration requirements introduced by the DDADUE Law.

On August 7, 2023, the Securities and Futures Commission of Hong Kong (SFC) issued a warning to virtual asset trading platforms (VATPs) engaging in “improper practices” under the SFC’s new regulatory regime for VATPs. In its statement, the SFC specifically called attention to the potential legal and regulatory consequences associated with false license application claims, established entity non-licensing, and the impacts of current VATP noncompliance on respective future license applications.

On July 4, 2023, the United Kingdom’s Financial Conduct Authority (FCA) issued a letter regarding crypto-asset financial promotion rules effective as of October 8, 2023. The new guidance supplements the FCA’s previously issued policy statement applying the U.K.’s financial promotions regime “to all firms marketing cryptoassets to UK consumers r,egardless [sic] of whether the firm is based overseas or what technology is used to make the promotion.”

On May 18, 2023, House Majority Whip Tom Emmer (R-MN) and Representative Darren Soto (D-FL) proposed the bipartisan Securities Clarities Act (the “Act”). The purpose of the Act is to “clarify and codify that an asset sold pursuant to an investment contract….including an asset in digital form…, that is not otherwise a security…does not become a security as a result of being sold or otherwise transferred pursuant to an investment contract.”

On May 30, 2023, the U.S. Securities and Exchange Commission (SEC) settled its case against a former Coinbase employee and his brother for alleged “insider trading” of digital assets. At the heart of the dispute was whether several digital assets trading on the platform were properly regarded as “securities” under U.S. law.

On May 18, 2023, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam clarified his position on the CFTC’s authority over digital asset markets. Behnam’s comments are consistent with Securities and Exchange Commission Chair Gary Gensler’s recommendation of greater CFTC authority over cryptocurrency and pushes for increased regulation of digital asset markets generally.