US Crypto Policy Tracker: Regulatory Developments
Follow below for the latest regulatory developments related to blockchain, cryptocurrencies, and digital assets from agencies and other regulatory bodies including the SEC, CFTC, CFPB, FRB, OCC, FDIC, FinCEN, Treasury, OFAC, FINRA, and FASB.
Last updated May 2025.
SEC
Commissioner Hester M. Peirce Previews Potential Conditional Exemptive Order for Firms Seeking to Use Blockchain to Issue, Trade, and Settle Securities
In a May 8, 2025, speech, Commissioner Peirce stated that the SEC’s Crypto Task Force “is considering a potential exemptive order that would allow firms to use DLT to issue, trade, and settle securities… [which would] allow firms to use innovative trading systems for eligible tokenized securities.” The potential conditional exemption would require compliance with market integrity conditions to prevent fraud and manipulation, and would aim to address challenges firms face in complying with existing regulations and encourage the issuance and trading of tokenized securities.
SEC Staff Publishes Observations on Crypto Issuer Disclosures
On April 10, 2025, the SEC’s Division of Corporation Finance (the Staff) published a Statement on Offerings and Registrations of Securities in the Crypto Asset Markets (the Statement). The Statement addresses the application of certain disclosure requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934 to disclosure documents relating to securities in the digital asset markets. The Statement provides general guidance on offerings of equity or debt securities of issuers whose operations relate to networks, applications, and/or digital assets, as well as offerings of digital assets themselves as part of an investment contract. The Statement is not prescriptive but descriptive and does not append absolute or relative value to the various disclosures the Staff has chosen to highlight. “Each issuer,” the Staff noted, “should consider its own facts and circumstances when preparing its disclosures.”
Read more on Latham's Global Fintech & Digital Assets Blog.
SEC Staff Clarifies That Certain Dollar-Backed Stablecoins Do Not Implicate the Securities Laws
On April 4, 2025, the SEC’s Division of Corporation Finance (the Staff) published a Statement on Stablecoins clarifying that in the Staff’s view the offer and sale of certain dollar-backed stablecoins does not involve an offer and sale of securities requiring registration under the US federal securities laws (the Stablecoin Statement). The Stablecoin Statement specifically addresses stablecoins that are designed to maintain a stable value relative to the US dollar (USD) on a one-for-one basis, can be redeemed for USD on a one-for-one basis, and are backed by assets held in a reserve that are considered low-risk and readily liquid with a USD-value that meets or exceeds the redemption value of the stablecoins in circulation (Covered Stablecoins). With respect to such Covered Stablecoins only, the Stablecoin Statement sets out the Staff’s view that the offer and sale of such Covered Stablecoins does not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act of 1933 or Section 3(a)(10) of the Securities Exchange Act of 1934.
Read more on Latham's Global Fintech & Digital Assets Blog.
SEC Staff Clarifies That Crypto Mining Does Not Implicate the Securities Laws
On March 20, 2025, the SEC Staff published a Statement on Certain Proof-of-Work Mining Activities (the Statement). Because Proof-of-Work Mining Activities “do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Securities Exchange Act of 1934,” miners and pool operators engaging in such PoW Mining Activities are not required to register with the SEC (or otherwise fall within one of the Securities Act’s exemptions from registration). The Statement is the Staff’s second non-binding clarification on how it views the federal securities laws applying to a specific aspect of the digital asset economy since President Trump issued an executive order on digital assets and the SEC established a Crypto Task Force.
Read more on Latham's Global Fintech & Digital Assets Blog.
SEC Staff Clarifies That Meme Coins Are Not Securities
On February 27, 2025, the SEC Staff published a Statement on Meme Coins (the Statement). According to the Staff, transactions in meme coins that fit the description above “do not involve the offer and sale of securities under the federal securities laws.” The Statement is the first tangible clarification of how the federal securities laws apply to a specific category of crypto since President Trump issued an executive order on digital assets and the SEC established a Crypto Task Force. The Statement is responsive to the Crypto Task Force’s first priority (as highlighted by SEC Commissioner Hester Peirce, who leads the task force): determining the status of digital assets under the securities laws.
Read more on Latham's Global Fintech & Digital Assets Blog.
SEC Withdraws Appeal of Court Decision to Vacate Its Dealer Rules
On February 20, 2025, the SEC voluntarily dismissed its appeal against a pair of related decisions by the US District Court for the Northern District of Texas to vacate the SEC’s Rules 3a5-4 and 3a44-2 (together, the Rules). The Rules, which the SEC adopted on February 6, 2024, expanded the definition of “dealer” and “government securities dealer” under the Securities Exchange Act of 1934 to capture a wider group of market participants, including those that had traditionally availed themselves of the “trader” exception.
Read more on Latham's Global Fintech & Digital Assets Blog.
SEC Launches Cyber and Emerging Technologies Unit Aimed at Safeguarding Investors
On February 20, 2025, the SEC announced the establishment of the Cyber and Emerging Technologies Unit (CETU), which will focus on combatting cyber-related misconduct and protecting retail investors from fraud in the emerging technologies sector. The new unit, led by Laura D’Allaird, replaces the SEC’s Crypto Assets and Cyber Unit and comprises about 30 fraud specialists and attorneys from various SEC offices with “substantial fintech and cyber-related experience.” This is a decrease from the approximately 50 individuals who worked in the Crypto Assets and Cyber Unit. In the statement announcing the CETU’s establishment, SEC Acting Chairman Mark T. Uyeda noted that the CETU will “complement the work of the Crypto Task Force,” which was created in January 2025 to develop a comprehensive and clear regulatory framework for cryptoassets. The CETU will focus on several priority areas, including fraud involving artificial intelligence and machine learning, as well as fraud involving blockchain technology and cryptoassets.
Read more on Latham's Global Fintech & Digital Assets Blog.
The SEC’s Crypto Task Force Charts a New Course
On February 4, 2025, Commissioner Hester Peirce, leader of the SEC’s newly established Crypto Task Force, published a statement outlining the Task Force’s 10 main areas of focus. Key items include the security status of digital assets, defining the SEC’s jurisdiction, relief for token offerings, registration issues, and a path forward for broker-dealers and custodying digital assets.
Read more on Latham's Global Fintech & Digital Assets Blog.
Ruling for SEC Clears Path for Continued Litigation in SEC v. Coinbase
On March 27, 2024, Judge Katherine Failla of the US District Court for the Southern District of New York (SDNY) ruled (the Ruling) in favor of the SEC on all but one argument raised in Coinbase’s motion for judgment on the pleadings, finding that the SEC adequately alleged the tokens at issue and Coinbase’s staking services are securities and that Coinbase has been operating as an unregistered broker, exchange, and clearing agency. The Ruling followed significant recent decisions in two other high-profile SEC enforcement actions regarding cryptocurrencies: SEC v. Ripple Labs, Inc., No. 1:20-Civ-10832 (SDNY), and SEC v. Terraform Labs Pte. Ltd., No. 1:23-cv-01346 (SDNY). The Coinbase decision, however, may be the most significant among the three decisions because (1) it addresses a broader range of market activity by a token exchange (as opposed to an issuer) and 13 third-party tokens (as opposed to fewer tokens from a single issuer), and (2) Judge Failla’s Ruling addresses the prior decisions in Ripple and Terraform and thus serves as the latest, most comprehensive opinion to date in the canon of case law on the issues.
Read more on Latham's Global Fintech & Digital Assets Blog.
Note: On February 27, 2025, the SEC announced the dismissal of the civil enforcement action against Coinbase.
SEC Issues Omnibus Approval for Spot Bitcoin Exchange-Traded Products
On January 10, 2024, the SEC issued, on an accelerated basis, an Omnibus Approval Order (the Order) for proposed NYSE Arca, Nasdaq, and Cboe BZX rule changes seeking to list and trade shares of 11 spot bitcoin trusts. Spot bitcoin trusts hold actual bitcoin, as opposed to bitcoin futures trusts, which hold derivatives tied to the price of bitcoin. The approval of these rule change requests represents a green light for spot bitcoin-based exchange traded products (ETPs) to trade on national securities exchanges for the first time in bitcoin’s 15-year history, after a decade of attempts by market participants to obtain such approval. In the Order, the SEC found the proposals to be “consistent with the Securities Exchange Act of 1934 (the Exchange Act) and rules and regulations thereunder applicable to a national securities exchange,” including the requirement that the exchanges’ rules be designed to “prevent fraudulent and manipulative acts and practices.”
Read more on Latham's Global Fintech & Digital Assets Blog.
SEC Continues Enforcing Against NFT Projects
On September 13, 2023, the SEC issued a cease-and-desist order (the Order) against Stoner Cats 2, LLC (SC2) for an alleged unregistered securities offering relating to SC2’s sale of $8.2 million worth of NFTs. The SEC alleged that the NFTs were issued to the public to finance the production of a web-based animated series by the same name. SC2 agreed to a settlement that includes a civil monetary penalty of $1 million and ceasing and desisting from violating the Securities Act of 1933. SC2 neither admitted nor denied any wrongdoing as part of the settlement, which does not include any allegations of misleading or fraudulent statements. The SEC obtained this settlement a few weeks after its first enforcement action against an NFT issuer.
Read more on Latham's Global Fintech & Digital Assets Blog.
SEC Crypto Assets and Cyber Enforcement Actions Website
The Enforcement Division’s Crypto Assets and Cyber Unit has brought numerous enforcement actions related to fraudulent and unregistered cryptoasset offerings and platforms. Note that many listed enforcement actions and investigations have been withdrawn under the SEC’s new leadership and policy stance.
Visit the SEC website for more information.
CFTC
CFTC Staff Withdraws Advisory on Review of Risks Related to Clearing Digital Assets
On March 28, 2025, the CFTC’s Division of Clearing and Risk (DCR) announced it is withdrawing CFTC Staff Advisory No. 23-07, Review of Risks Associated with Expansion of DCO Clearing of Digital Assets, effective immediately. As stated in the withdrawal letter, DCR determined to withdraw the advisory to ensure that it does not suggest that its regulatory treatment of digital asset derivatives will vary from its treatment of other products.
Visit the CFTC website for more information.
CFTC Staff Withdraws Advisory on Virtual Currency Derivative Product Listings
The CFTC’s Division of Market Oversight (DMO) and DCR announced they are withdrawing CFTC Staff Advisory No. 18-14, Advisory with Respect to Virtual Currency Derivative Product Listings, effective immediately. As stated in the withdrawal letter, DMO and DCR determined that the advisory is no longer needed given additional staff experience with virtual currency derivative product listings and increasing market growth and maturity.
Visit the CFTC website for more information.
Digital Asset Markets Subcommittee Recommendation to the CFTC’s Global Markets Advisory Committee (GMAC)
Adoption of an Approach for the Classification and Understanding of Digital Assets (March 6, 2024)
A clear, consensus-driven approach to classifying assets and the functions they serve underpins robust markets and effective regulation. The evolving digital asset ecosystem has led many to develop proprietary taxonomies to classify digital assets and their related technology. In recognition of this progress, the Subcommittee has engaged digital asset stakeholders across the broader digital asset ecosystem to build a common approach for the classification and understanding of digital assets. This approach aims to set out consistent language for participants in the digital asset ecosystem to promote innovation, identify and address risk considerations, and enable effective regulatory understanding. With this objective in mind, the approach builds upon the considerable classification efforts of global prudential standard setters and regional authorities, including the Bank for International Settlements, the Financial Stability Board, and others. The GMAC recommends this approach be considered an initial basis for a consensus-driven, functional taxonomy. However, as the digital asset ecosystem continues to evolve, so too will the terminology used to classify it.
Visit the CFTC website for more information.
CFTC’s Digital Asset Markets Subcommittee Recommends Expanded Use of Non-Cash Collateral Through Blockchain Technology
On November 21, 2024, the Digital Asset Markets Subcommittee of the CFTC’s GMAC issued a report that recommended expanding the use of non-cash collateral in derivatives markets through distributed ledger technology (DLT). In the Report, the Subcommittee identifies several ways in which using DLT may mitigate or avoid the challenges that have historically constrained the use of non-cash collateral in derivatives markets, such as improved transfer timing and avoiding other inefficiencies of existing market and technology infrastructure. The Report emphasizes that the use of DLT for existing forms of eligible non-cash collateral would not alter or change the nature of the underlying assets, and thus not require regulatory amendments to realize potential benefits and collateral management efficiencies.
Read more on Latham's Global Fintech & Digital Assets Blog.
Digital Assets Primer (December 2020)
This primer provides an overview of digital assets and the digital assets market. Regulation of digital assets, including the CFTC’s role, is also explained in this primer.
Visit the CFTC website for more information.
CFTC Digital Assets Website
The CFTC’s digital assets website includes resources for market participants and customers about digital assets and the CFTC’s oversight role.
Visit the CFTC website for more information.
CFPB
CFPB Proposes to Regulate Large Digital Wallet and Payment App Providers
On November 7, 2023, the CFPB proposed a rule, Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications (the Proposal), to supervise large providers of digital wallets and payment apps. The Proposal aims to ensure that US-based non-bank financial service companies providing digital wallets and payment apps will be subject to the same federal supervisory rules as banks, credit unions, and other financial institutions that the CFPB already supervises. According to the CFPB, fintech companies and other firms offering novel products and services in the consumer finance space have “blur[ed] the traditional lines of banking and commerce.”
The Senate voted on a Congressional Review Act resolution that would rescind this proposal, and the House of Representatives is planning to vote on the same resolution. The White House indicated on the day of the Senate vote that President Donald Trump would sign the resolution.
Read more on Latham's Global Fintech & Digital Assets Blog.
CFPB Proposes Extending Electronic Funds Transfer Act Protections to Stablecoin and Gaming Accounts
On January 10, 2025, the CFPB issued a proposed interpretative rule that would extend the consumer protections of the Electronic Funds Transfer Act (EFTA) to certain stablecoin and other virtual currency accounts, video game accounts, and credit card rewards points accounts (the Proposed Interpretation). In issuing the Proposed Interpretation, the CFPB seeks to ensure consistent application of the EFTA to emerging payment mechanisms and protect consumer rights in the event of unauthorized transfers and other errors. However, coming a little more than a week before President Trump’s inauguration, the Proposed Interpretation is unlikely to gain significant traction in its current form. As President Trump’s first term illustrated, and with the CFPB under ongoing scrutiny and criticism, a recalibration of the agency’s regulatory and enforcement approach and priorities is likely on the horizon. With the Trump administration signaling both a deregulatory and digital asset-friendly approach, the role of the CFPB with respect to stablecoins and emerging payment mechanisms will be an area of intersecting interests to watch regardless of the fate of the Proposed Interpretation.
Read more on Latham's Global Fintech & Digital Assets Blog.
Board of Governors of the Federal Reserve System
FRB Rescinds Previous Guidance on Crypto Activities in the Banking Sector
On April 24, 2025, the FRB announced it will rescind guidance for banks issued in 2022 related to digital asset and stablecoin activities. It also announced that, together with the FDIC, it will join the OCC (collectively, the agencies) in withdrawing from two 2023 joint statements that limited banks’ ability to engage in digital asset activities. According to the FRB, “[t]hese actions ensure the Board’s expectations remain aligned with evolving risks and further support innovation in the banking system.” As a result of rescinding SR Letter 22-6, the FRB will no longer expect banks to notify the FRB prior to engaging in cryptoasset-related activities and the FRB “will instead monitor banks’ crypto-asset activities through the normal supervisory process.” As a result of rescinding SR Letter 23-8, a state member bank is no longer required to receive a written notification of supervisory nonobjection from the FRB before engaging in the covered cryptoasset and stablecoin activities.
Latham Global Fintech & Digital Assets Blog
Federal Reserve Narrows the Crypto Activities of Member Banks
On January 27, 2023, the Board of Governors of the Federal Reserve System (Federal Reserve) took two actions, clarifying that it considers many cryptocurrency activities to be inconsistent with the business of banking. First, the Federal Reserve announced that it had denied the application of Custodia Bank, Inc. (Custodia) to become a member of the Federal Reserve System. Second, it issued a policy statement (Policy Statement) under Section 9(13) of the Federal Reserve Act to “limit the activities of state member banks and subsidiaries of state member banks in a manner consistent with section 24 of the Federal Deposit Insurance Act.” Section 24 states that an FDIC-insured state bank may not engage as a principal in any activity that is not permissible for a national bank, unless the FDIC determines that the activity would not pose a significant risk to the Deposit Insurance Fund and the insured state bank is, and continues to be, in compliance with applicable capital standards prescribed by the appropriate federal banking agency. The Policy Statement governs “novel activities” that both FDIC-insured state member banks and non-insured state institutions (that may be admitted to Federal Reserve membership) may propose. A state member bank must first consult federal statutes, OCC regulations, and OCC interpretations to determine whether national banks are permitted to undertake the activity. If none of the sources authorizes the activity, then state member banks must investigate whether federal statute or part 362 of the FDIC’s regulations gives state banks permission to engage in the activity. If no authority for a state bank exists, a state member bank may not engage in the activity unless it has received the Federal Reserve’s permission under Section 208.3(d)(2) of Regulation H. Under that provision, a state member bank may not, without Federal Reserve permission, change the general character of its business or the scope of the corporate powers it exercised at the time of its admission to membership.
Read more on Latham's Global Fintech & Digital Assets Blog.
On August 8, 2023, the FRB published the related SR 23-8, Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens.
SR Letter 23-8 was withdrawn by the FRB on April 24, 2025.
Banking Regulators Issue Joint Statement on Crypto Risks
On January 3, 2023, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the OCC (collectively, the agencies) issued a concise joint statement on crypto-asset risks to banking organizations (“Joint Statement on Crypto-Asset Risks to Banking Organizations”). With the safety and soundness of the US banking system in mind, the statement addresses the various risks that the agencies view as being associated with cryptoassets and cryptoasset sector participants. According to the statement, “banking organizations should ensure that crypto-asset-related activities can be performed in a safe and sound manner, are legally permissible, and comply with applicable laws and regulations, including those designed to protect consumers.”
A related joint statement (“Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities”) was published on February 23, 2023, addressing crypto-asset risks and liquidity risks to banking organizations resulting from crypto-asset market vulnerabilities.
Read more on Latham's Global Fintech & Digital Assets Blog.
On April 24, 2025, the FRB and FDIC announced (here and here) that they were joining the OCC in withdrawing from the two joint statements.
Federal Reserve Issues Cryptoasset Engagement “Rules of the Road” for Its Supervised Banking Organizations
On August 16, 2022, the Federal Reserve issued a Supervision and Regulation Letter outlining its expectations for FRB-supervised banking organizations engaged in cryptoasset-related activities (SR Letter 22-6). This follows the publication of a financial institution letter issued by the FDIC in April 2022 (the FDIC Letter) and an interpretive letter issued by the OCC in November 2021 (the OCC Letter). Both letters similarly address supervisory expectations in connection with cryptoasset-related activities that FDIC-supervised institutions and OCC-chartered banks (i.e., national banks and federal savings associations) engage in, respectively. While SR Letter 22-6 does not mention President Biden’s March 2022 Executive Order on Ensuring Responsible Development of Digital Assets, it does seemingly address the Order’s broad mandate that federal financial regulators “consider the extent to which investor and market protection measures within their respective jurisdictions may be used to address the risks of digital assets and whether additional measures may be needed.” According to SR Letter 22-6, the emerging cryptoasset sector presents potential opportunities to banking organizations, their customers, and the overall financial system. However, the Federal Reserve notes five areas in which cryptoassets pose distinct risks: (i) Technology and operations risks related to cybersecurity and governance; (ii) Anti-money laundering (AML) and countering the financing of terrorism (CFT) risks; (iii) Consumer protection risks; (iv) Legal compliance risks; and (v) Financial stability risks.
Read more on Latham's Global Fintech & Digital Assets Blog.
SR Letter 22-6 was withdrawn by the FRB on April 24, 2025.
OCC
OCC Interpretive letters Related to Digital Assets
- Interpretive Letter #1170 (July 2020) clarified the authority of national banks and federal savings associations to provide cryptocurrency custody services for customers.
- Interpretive Letter #1172 (September 2020) clarified the authority of national banks and federal savings associations to hold reserves of assets backing stablecoins on behalf of certain customers that issue stablecoins.
- Interpretive Letter #1174 (January 2021) clarified the authority of national banks and federal savings associations to participate in independent node verification networks and use stablecoins to conduct payment activities and other bank-permissible functions.
- Interpretive Letter #1176 (January 2021) affirmed the OCC’s authority to charter national banks that limit operations to those of a trust company and related activities. On the same date, the OCC granted conditional approval for the conversion of Anchorage Trust Company, a South Dakota-chartered non-depository public trust company offering digital asset and cryptocurrency custody services, to become Anchorage Digital Bank National Association, the first cryptocurrency trust company to operate under a national trust bank charter.
- Interpretive Letter #1179 (November 2021) clarified that national banks and federal savings associations must demonstrate that they have adequate controls in place before they can engage in certain cryptocurrency, distributed ledger, and stablecoin activities, as specified in Interpretive Letters #1170, #1172, and #1174. Interpretive Letter #1179 also reiterated that under OCC Interpretive Letter #1176, the OCC retains discretion to determine, for purposes of federal law, whether an activity is a trust activity and whether an activity is conducted in a fiduciary capacity. RESCINDED
- Interpretive Letter #1183 (March 2025) rescinds Biden-era Interpretive Letter 1179, eliminating the supervisory nonobjection process for banks to engage in digital asset activities.
- Interpretive Letter #1184 (May 2025) affirms the custody activities permitted in Interpretive Letter #1170.
OCC Affirms that Banks May Engage in Crypto Custody and Execution Activities
On May 7, 2025, the OCC published Interpretive Letter #1184 (a response to an inquiry from a regulated entity) affirming that national banks and federal savings associations (collectively, banks) may provide and outsource cryptocurrency custody and execution services on behalf of customers. Interpretive Letter #1184 affirms the custody activities permitted in Interpretive Letter #1170, first published on July 22, 2020. Specifically, a bank may provide cryptoasset custody services in a fiduciary or non-fiduciary capacity; outsource bank-permissible cryptoasset activities, including custody and execution services to third parties (e.g., a sub-custodian); buy and sell digital assets held in custody on a customer’s behalf at the direction of the customer and in a manner consistent with the customer agreement and applicable law; facilitate a customer’s cryptocurrency and fiat currency exchange transactions; and provide various crypto-related services such as transaction settlement, trade execution, recordkeeping, valuation, tax services, and reporting.
Latham blog to follow.
OCC Affirms Regulated Entities Can Engage in Crypto and Stablecoin Activities
On March 7, 2025, the OCC reaffirmed that national banks and federal savings associations (collectively, banks) may participate in a range of cryptocurrency activities, including crypto custody, certain stablecoin activities, and participation in independent node verification networks. Specifically, the OCC issued Interpretive Letter 1183, which rescinds Biden-era Interpretive Letter 1179 (November 18, 2021). Interpretive Letter 1179 directed that the activities addressed in previous OCC interpretive letters — i.e., 1170 (bank crypto custody), 1172 (bank stablecoin reserve holding), and 1174 (banks acting as a node on a distributed ledger) — were legally permissible, provided the bank could demonstrate, to the satisfaction of its supervisory office, that it had controls in place to conduct the activity in a safe and sound manner. The OCC stated in Interpretive Letter 1183 that the permissibility of the activities described in Interpretive Letters 1170, 1172, and 1174 were reaffirmed, and that the supervisory nonobjection process described in Interpretive Letter 1179 “is no longer necessary.” The OCC stated that its staff has increased its knowledge and supervisory expertise regarding cryptoasset activities. As part of its ongoing supervisory process, the OCC will, however, further examine the activities described in Interpretive Letters 1170, 1172, and 1174.
The OCC also simultaneously withdrew itself from two interagency statements that reflected the federal banking regulators’ “careful and cautious” approach to crypto under the Biden administration: (i) the “Joint Statement on Crypto-Asset Risks to Banking Organizations” (January 3, 2023), and (ii) the “Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities” (February 23, 2023).
Read more on Latham's Global Fintech & Digital Assets Blog.
Banks Can Hold Stablecoin Reserves, OCC States in Crypto-Friendly Letter
On September 21, 2020, the OCC issued Interpretive Letter #1172 (the Letter), giving national banks and federal savings associations (FSAs) the greenlight to hold deposits that serve as reserves for the underlying assets backing certain “stablecoins” on behalf of customers. According to the Letter, national banks and FSAs are granted this expanded authority to hold stablecoin reserves if all of the following conditions are met: (i) Deposits that constitute reserves for stablecoins are limited to stablecoin transactions involving hosted wallets; (ii) The stablecoins are backed by a single fiat currency; (iii) The stablecoins are redeemable by the holder on a one-to-one basis upon submission of a redemption request to the issuer.
Read more on Latham's Global Fintech & Digital Assets Blog.
Innovative Fintech Initiatives
Brian P. Brooks, who was newly appointed as OCC’s acting comptroller, advanced the agency’s fintech-focused modernization initiatives and took steps to fulfill his promise to support technological innovation in the banking industry. On June 25, 2020, while speaking on the American Bankers Association’s podcast, Brooks announced that the OCC will introduce a new Payments Charter 1.0 (Payments Charter) later in 2020 that will serve as a federal alternative to obtaining state money transmitter licenses. That announcement came less than a month after the OCC issued an advance notice of proposed rulemaking (ANPR) requesting public comment regarding the OCC’s regulations relating to “digital activities” of national banks and FSAs. The ANPR was issued to ensure that such regulations continue to evolve with industry developments.
Read more on Latham's Global Fintech & Digital Assets Blog.
FDIC
FDIC Removes Roadblocks to Crypto Activities in the Banking Sector
On March 28, 2025, the FDIC issued a Financial Institution Letter (FIL-7-2025) that provides new guidance for FDIC-supervised institutions engaging in or seeking to engage in crypto-related activities (the Guidance). Specifically, the Guidance clarifies that FDIC-supervised institutions can engage in permissible crypto-related activities without receiving prior FDIC approval. The Guidance rescinds FIL-16-2022 (Notification of Engaging in Crypto-Related Activities), issued on April 7, 2022, which initially established the prior notification requirement for crypto-related activities. The rescission of FIL-16-2022 by the FDIC predates a series of letters sent on April 1, 2025, by House Committee on Financial Services Chairman French Hill to the heads of the FDIC, OCC, FRB, CFPB, SEC, and Financial Stability Oversight Council, requesting the rescission, modification, or re-proposal of specific Biden administration actions. In the letter addressed to FDIC Acting Chairman Travis Hill, the committee stated that “[t]he FDIC should withdraw FIL-16-2022, as it imposes unnecessary supervisory burdens on banks’ use of distributed ledger technology.”
Read more on Latham's Global Fintech & Digital Assets Blog.
“Advisory to FDIC-Insured Institutions Regarding Deposit Insurance and Dealings with Crypto Companies”
To address certain misrepresentations about FDIC deposit insurance by some crypto companies, the FDIC issued an “Advisory to FDIC-Insured Institutions Regarding Deposit Insurance and Dealings with Crypto Companies.” By federal law, the FDIC only insures deposits held in insured banks and savings associations in the unlikely event of an insured bank’s failure. The FDIC does not insure assets issued by non-bank entities, such as crypto companies. The FDIC Crypto Advisory reminds insured banks that they need to be aware of how FDIC insurance operates and need to assess, manage, and control risks arising from third-party relationships, including those with crypto companies.
Read the FDIC Advisory.
The Financial Crimes Enforcement Network
FinCEN Seeks Enhanced Oversight of Crypto Mixing
On October 19, 2023, Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rule Making (NPRM) that would designate as a “primary money laundering concern” all non-US convertible virtual currency mixing (CVC mixing). The NPRM would impose enhanced reporting and recordkeeping requirements for any financial transactions involving international mixers, intended to mitigate the risks of money laundering and terrorist financing. The proposed designation is pursuant to Section 311 of the USA PATRIOT Act, which empowers the Secretary of the Treasury to require domestic financial institutions and domestic financial agencies to take certain “special measures” against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts designated as a primary money laundering concern. Section 311 has heretofore been employed only against non-US financial institutions and jurisdictions rather than an individual class of transactions.
Read more on Latham's Global Fintech & Digital Assets Blog.
FinCEN Looks to Rein In Cryptocurrency Transactions
In a surprise release in the waning days of the first Trump administration, FinCEN issued a proposed rule (the Proposal) that would impose significant new obligations on market participants in the cryptocurrency and digital asset market (Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets). The Proposal “would require banks and money service businesses (MSBs) to submit reports, keep records, and verify the identity of customers in relation to transactions involving convertible virtual currency (CVC) or digital assets with legal tender status (LTDA) held in unhosted wallets, or held in wallets hosted in a jurisdiction identified by FinCEN.” Under the Proposal, CVC and LTDA, such as Bitcoin and Ether, would be deemed ‘‘monetary instruments’’ under the Bank Secrecy Act (BSA). This classification would bring them under the BSA’s existing anti-money laundering and countering the financing of terrorism recordkeeping and reporting requirements for currency transactions. The Proposal would also establish a new recordkeeping requirement for certain CVC and LTDA transactions, similar to the recordkeeping and travel rule regulations applicable to funds transfers.
Read more on Latham's Global Fintech & Digital Assets Blog.
US Department of the Treasury
Treasury Releases Final Regulations Implementing Bipartisan Tax Reporting Requirements for Brokers of Digital Assets
On December 27, 2024, Treasury and the Internal Revenue Service (IRS) released final regulations regarding reporting requirements for trading front-end service providers interacting directly with customers on digital asset transactions, often referred to as “DeFi brokers.” The final rules do not change or impose any new tax obligations on digital assets. Taxpayers have always been obligated to include gains from sales or exchanges of digital assets in their income. Instead, the rules announced today require brokers — not digital asset holders — to report on the gross proceeds of the sale of their digital assets through a Form 1099. The rules ensure DeFi brokers of digital assets are subject to the same information reporting rules as brokers for securities and operators of custodial digital asset trading platforms.
Read the final Treasury regulations.
Office of Foreign Assets Control
Fifth Circuit Overturns OFAC Sanctions Against Crypto Mixer Tornado Cash
On November 26, 2024, a three-judge panel of the US Court of Appeals for the Fifth Circuit reversed a Texas District Court decision and overturned Treasury’s Office of Foreign Assets Control (OFAC) sanctions designations against certain smart contracts associated with decentralized virtual currency “mixer” Tornado Cash. OFAC added Tornado Cash to the Specially Designated Nationals (SDN) list on August 8, 2022, marking the first economic sanctions against a decentralized finance (DeFi) protocol. OFAC stated that Tornado Cash had “indiscriminately” processed transactions and “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks.” Importantly, OFAC sanctioned not only the Tornado Cash “entity,” but over 50 Ethereum addresses representing Tornado Cash smart contracts.
Read more on Latham's Global Fintech & Digital Assets Blog.
OFAC Sanctions Decentralized Virtual Currency “Mixer”
On August 8, 2022, OFAC announced sanctions against decentralized virtual currency “mixer” Tornado Cash (and 44 associated USDC and ETH addresses) — the first action of its kind against a decentralized finance (DeFi) protocol. Mixers (or “blenders”) are centralized platforms or decentralized protocols (software that operates on the Ethereum blockchain) that specialize in masking the source and flow of digital assets via randomized and deliberately obfuscating transactions. They can therefore be an attractive resource for those seeking to maximize anonymity, launder stolen digital assets, or evade law enforcement. OFAC asserted that since 2019, individuals and groups have used Tornado Cash to “launder” more than $7 billion worth of cryptocurrency. The service has allegedly been used by North Korea-affiliated hacking collective Lazarus Group (itself sanctioned since September 2019) to launder $455 million in stolen cryptocurrency, as well as recent multimillion-dollar ransomware attacks and DeFi exploits. Treasury stated that Tornado Cash had “indiscriminately” processed transactions and “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks.”
Read more on Latham's Global Fintech & Digital Assets Blog.
On March 21, 2025, Treasury removed the economic sanctions against Tornado Cash.
The Financial Industry Regulatory Authority, Inc.
FINRA Publishes Exploratory Report on the Metaverse
On October 24, 2024, the Office of Financial Innovation (OFI) of the Financial Industry Regulatory Authority, Inc. (FINRA) published “The Metaverse and the Implications for the Securities Industry.” The Report covers an overview of how FINRA defines “the metaverse,” market trends, potential applications for metaverse platforms that the securities industry is exploring, potential use cases, challenges and related factors associated with metaverse platforms, and potential regulatory considerations. The Report is meant to be exploratory and informational only, and states that it “does not create any new legal or regulatory requirements or new interpretations of existing requirements.” FINRA, however, notes that its rules, and the securities laws generally, apply regardless of the technology used to facilitate brokerage activities.
Read more on Latham's Global Fintech & Digital Assets Blog.
The Financial Accounting Standards Board
FASB
On September 6, 2023, the Financial Accounting Standards Board (FASB) voted to approve Accounting for and Disclosure of Crypto Assets, an Accounting Standards Update (ASU) to FASB Accounting Standards Codification (ASC) Topic 350 (Intangibles—Goodwill and Other), originally proposed in March 2023. The ASU will standardize the treatment of certain digital assets under US generally accepted accounting principles (GAAP) (the Update). According to FASB, market feedback indicated concern with the current accounting methodology for cryptoassets under ASC 350 as indefinite-lived intangible assets (whereby assets must be calculated at a historical cost less impairment, such as for trademarks). The methodology reflects “only the decreases, but not the increases, in the value of crypto assets in the financial statements until they are sold,” and therefore “does not provide investors . . . with decision-useful information . . . that reflects (1) the underlying economics of those assets and (2) an entity’s financial position.” To address FASB’s concern, the Update requires an entity to measure cryptoassets at fair value each reporting period with changes in fair value recognized in net income. The Update also mandates enhanced disclosure requirements concerning an entity’s cryptoasset holdings, intended to improve information available to investors.
Read more on Latham's Global Fintech & Digital Assets Blog.