USA LAW AND PRACTICE Contributed by: Margo H.K. Tank, Michael Fluhr, Era Anagnosti, Kristin Boggiano, David Stier, Liz S. M. Caires, Adam Dubin, Emily Honsa Hicks, Kathleen Birrane and Chezelle McDade, DLA Piper LLP
ity decentralized”. Treasury asserted that whether an entity is subject to regulation depends on specific facts and circumstances, and degrees of decentralisa - tion may not be dispositive. The appellate court deci - sion overturning OFAC’s designation of Tornado Cash illustrates the uncertainty around when DeFi activities are subject to regulations. Potentially relevant to DeFi exchanges is 2019 FinCEN guidance that an exchange is not a money transmitter where it operates P2P and the parties both maintain control over the assets and interact directly with the payment system. Following the passage of the GENIUS Act, Treasury issued a Request for Comment to the cryptocurrency industry about innovative methods for detecting illicit activity in digital assets, including how risk manage - ment methods can apply to DeFi. This signals that the administration is not only open to DeFi, but has directed Treasury to embrace a risk-based approach towards it. DeFi protocols have received less securities scruti - ny than centralised exchanges and other products. In 2025, an appellate court affirmed the dismissal of claims against a prominent decentralised exchange developer for alleged unregistered sale of securities, reasoning that the developer neither held title to the underlying assets nor solicited their sale. SEC also recently closed an investigation into the same devel - oper without enforcement action. Also, at least one court has held that provision of self-custodial wallet software that allows routing of transactions to decen - tralised exchanges and other DeFi protocols does not “implicate” many of the factors courts use in assess - ing activity by a securities broker. Nevertheless, there remains some uncertainty about whether and when a decentralised protocol might implicate securities law. See 2.10 Significant Enforcement Actions and 6.3 Impact of the Emergence of Cryptocurrency Exchanges . 10.10 Regulation of Funds In the USA, funds are regulated based on the assets held. If a fund primarily invests in securities, it is regu - lated by SEC; if it primarily invests in regulated com -
modities interests or other derivatives, it is regulated by CFTC. If a fund invests in securities and commodi - ties, the fund may be regulated by both regulators. SEC and CFTC regulations require registration of funds and their advisers. There are exemptions to registration requirements for funds and advisers that meet certain criteria. Notably, 2025 saw the rise of DATs, which hold digital assets in their corporate treasury as a primary com - ponent of their business. To the extent such digital assets constitute securities or regulated commodities interests, these companies may be subject to regula - tion as a fund by SEC or CFTC, though to date no DAT has registered with these regulators. Because the legal classification of various digital assets remains uncertain, so too does the unique reg - ulation of DATs. To the extent that DATs sell their own equity or debt securities, they are subject to state and federal securities laws. Further, to the extent that DATs hold and invest in digital assets that constitute securi - ties, DATs may also be regulated as investment com - panies. The Investment Company Act of 1940 regu - lates companies that engage primarily in investing, reinvesting, and trading in securities and whose own securities are offered to the investing public. The Act requires investment companies to register with SEC and comply with SEC regulations, including required disclosures, though exemptions are available. To date, no DATs have registered as investment companies – taking the position that the digital assets held do not constitute securities. Analogously, the CEA regulates the activities of com - modity pool operators, which raise funds from the sale of securities for the purpose of trading in commodity interests, including futures, swaps, options, or deriva - tives. Commodity pool operators must register with CFTC and comply with its regulations. The extent to which digital assets constitute commodities subject to regulation by CFTC remains similarly unsettled. Furthermore, the CEA and CFTC do not comprehen - sively regulate the commodity spot market, so DATs that invest and trade primarily in spot digital assets likely would not fall within these regulations, though
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