USA Trends and Developments Contributed by: Andrea S Kramer, ASKramer Law
Moving away from rule-making by enforcement, the SEC: • dropped litigation against Coinbase, Coinsensys, Open Seas and Binance; • paused the Gemini Earn suit; • dismissed its appeal of the court order vacating its It also dropped investigations into Uniswap, Rob - inhood Crypto and Crypto.com, and dismissed its enforcement action against Dragonchain. The SEC issued guidance that meme coins, certain digital assets and certain reserve stablecoins are not securities. The agency also issued guidance that min - ing, mining pools and certain protocol liquid staking activities do not involve security offerings. Furthermore, the SEC: • withdrew 14 rules proposed by the prior adminis - tration; • withdrew an interpretation that broker-dealers can - not be crypto custodians; • issued FAQs relating to crypto activities and dis - tributed ledger technology (DLT); and • issued new FAQs on broker-dealer responsibili - ties when carrying and custodying crypto assets, including assets such as bitcoin. Broad guidance included application of rules with respect to: • possession and control of securities carried in customer accounts, facilitating in-kind creation and redemption of shares of ETFs; • SIPC applicability; and definition of a securities dealer; and • dropped its appeal in Ripple/XRP. • transfer agent obligations with crypto or DLT use. In August, the SEC launched “Project Crypto”, setting out five initiatives on US capital formation, facilitating custody and trading, and creating a “regulatory sand - box” with an innovation exemption to fast-track new technologies and businesses while avoiding incom - patible or burdensome regulations. One of the first close collaborations between the SEC and the CFTC
involved the CFTC’s launch of crypto spot contracts to be traded on CFTC-regulated commodity exchanges, known as designated contract markets (DCMs). CFTC To engage stakeholders, refocus and foster crypto innovation, and provide regulatory clarity, Acting CFTC Chair Caroline Pham announced a series of public roundtables on “evolving trends and innovation in market structure, including issues such as affiliated entities and conflicts of interest, prediction markets and digital assets”, renewing earlier calls for open public engagement on derivatives policy. In February, the CFTC announced a Crypto CEO Forum to help launch a digital assets markets pilot programme for tokenised non-cash collateral such as stablecoins. In late 2024, the Digital Asset Mar - ket Subcommittee had laid the groundwork, rec - ommending expanding the use of such collateral through blockchain technology to improve efficiency. The CFTC rescinded several advisory letters that had imposed special conditions on crypto derivatives, including Staff Advisories No 18-14 and No 23-07. In May, Acting Chair Pham announced plans to issue an advisory on exchange volatility controls to mitigate systemic risk and promote market resiliency. Also in May, CFTC Letter No 25-14 was released, address - ing certain cross-border definitions of “US persons” under the CFTC Regulations. In August, the CFTC launched “Crypto Sprint” to implement the PWG recommendations, which refer - enced one of the first collaborations with the SEC to facilitate trading of crypto spot contracts listed on a DCM so that “CFTC-regulated platforms [can] offer [certain investment contract] products with margin capabilities” to unlock “even greater liquidity for these assets”. New products A key element in positioning the United States as a crypto world leader involves support for new prod - ucts. The following focuses on two new products that are taking the US derivatives markets by storm: per - petual futures and prediction contracts.
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