Digital Currency & Blockchain Briefing

Topic 1: SEC and CFTC Signal New Era of Coordinated Crypto Regulation Under Project Crypto

Key Takeaway: The SEC and CFTC’s decision to jointly advance Project Crypto reflects a recognition that fragmented oversight is increasingly mismatched with how digital asset markets operate in practice. By committing to coordinated use of existing authorities while preparing for future legislation, the agencies are signaling a more unified and durable federal approach to regulating crypto markets, with meaningful implications for token classification, trading venues, derivatives, and emerging market infrastructure.

The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) held a joint leadership meeting on January 30, 2026, at which SEC Chair Paul Atkins and CFTC Chair Michael Selig announced that Project Crypto (formerly an SEC initiative) will move forward as an interagency initiative between the SEC and CFTC. The chairs emphasized that digital asset markets increasingly operate across traditional regulatory lines and that uncoordinated oversight could create confusion, inefficiency, and unnecessary compliance burdens without meaningfully improving investor protection. The leaders acknowledged the likelihood of congressional market structure legislation, but they stressed that legislative action alone will not resolve near-term uncertainty and that the agencies intend to act within their existing authorities in a more aligned and consistent manner.

The chairs described Project Crypto as a framework for sustained cooperation rather than mere jurisdictional realignment. Each agency will continue to operate within its statutory mandate but with an emphasis on harmonizing definitions, supervisory approaches, and market oversight where securities and commodities regulation intersect. Priorities discussed included developing greater clarity around digital asset classification, modernizing regulatory regimes to accommodate blockchain-based market infrastructure, and reassessing existing rules that have contributed to the offshore development of crypto-related trading and derivatives products. The CFTC also signaled a shift in its approach to event contracts and prediction markets, directing staff to revisit prior restrictions and pursue clearer, more workable standards through new rulemaking.

The meeting signaled an intent to move beyond episodic coordination toward a more durable and institutionalized partnership between the SEC and CFTC, which was enshrined in the agencies’ subsequent Memorandum of Understanding. Market participants should expect increased information-sharing; closer alignment in oversight and supervision; and a more active regulatory agenda affecting token classification, trading platforms, derivatives, and collateral arrangements. At the same time, the chairs’ focus on reducing regulatory fragmentation and supporting onshore innovation suggests openness to new product development where consistent guardrails can be established.

Topic 2: SEC Sharpens Crypto Vision With New Guidance and Policy Signals

Key Takeaway: The SEC’s March 2026 crypto asset interpretation marks a meaningful shift from case-by-case enforcement toward clearer regulatory line-drawing, expressly recognizing that most crypto assets are not themselves securities while preserving SEC oversight where crypto assets are sold as part of investment contracts. The guidance still leaves open several questions, and we expect additional guidance from the SEC or staff to further clarify the investment contract analysis and the promised innovation exemption.

In March, the SEC issued an interpretation clarifying how federal securities laws apply to certain crypto assets and transactions. The CFTC joined the interpretation for purposes of administering the Commodity Exchange Act (CEA) consistently with the SEC’s interpretation. The guidance creates a token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins, and digital securities; addresses when a “nonsecurity crypto asset” may become subject (or cease to be subject) to an investment contract; and clarifies treatment of airdrops, protocol mining, protocol staking, and wrapping. 

The guidance also fits within recent broader policy messaging SEC Chair Atkins offered. In his March 17 remarks at the DC Blockchain Summit, Chair Atkins framed the interpretation as a first step toward “Regulation Crypto Assets,” including potential start-up, fundraising, and investment contract safe harbors designed to give crypto projects a more practical path to raise capital and mature in the United States. Days later at the Digital Asset Summit, Chair Atkins emphasized that the SEC’s recent actions “draw[s] clear lines” around the agency’s jurisdiction, while cautioning that only Congress can “future-proof” crypto regulation through comprehensive market structure legislation.

Chair Atkins and SEC Commissioner Hester Peirce have similarly recently touted the SEC’s coordination with the CFTC and signaled an approach more supportive of innovation. In their ETHDenver remarks, Chair Atkins and Commissioner Peirce highlighted the agency’s recent efforts to end “regulation by enforcement;” coordinate with the CFTC; issue staff guidance on issues such as mining, staking, meme coins, and stablecoins; rescind Staff Accounting Bulletin 121; and build toward rules, exemptive relief, and Commission interpretations. 

While the guidance is welcome, the interpretation’s position on the creation and termination of an investment contract in connection with the offer and sale of a crypto asset turns on the nature, source, channels of communication, and timing of promises by a crypto asset issuer. Where promises of future actions “remain connected” to the crypto asset and remain open or unfulfilled, the guidance concludes that an investment contract still exists and may extend to secondary trading. In a departure from the agency’s historical emphasis on full and fair disclosure, the guidance concludes that “representations or promises that are vague or contain no semblance of an actionable business plan, such as those lacking milestones, funding, or other plans for needed resources, likely would not create reasonable expectations of profit.” We expect further guidance from the SEC or its staff regarding the investment contract analysis.

Topic 3: SEC Dismisses Administrative Action Against American CryptoFed DAO

Key Takeaway: The SEC’s dismissal of the American CryptoFed DAO proceedings reflects the agency’s willingness to revisit prior digital asset enforcement and registration positions in light of broader shifts in federal crypto policy.

On February 2, 2026, the SEC dismissed administrative proceedings originally brought in 2021 against American CryptoFed DAO LLC, a Wyoming-based digital asset company, that sought to register a stable token and governance token through Form 10 and Form S-1 filings in September 2021. In November 2021, the SEC instituted proceedings under Section 12(j) of the Exchange Act regarding the Form 10 filing in November 2021 and instituted additional proceedings under Section 8(d) of the Securities Act in November 2022, seeking a stop order against the Form S-1. The SEC alleged that the S-1 contained materially misleading statements, omissions, and incomplete disclosures relating to the proposed token offering, and it alleged that American CryptoFed DAO had failed to cooperate with the agency’s examination of the registration attempt.

In 2022, American CryptoFed DAO sought to withdraw its Form S-1 and its Form 10, but the SEC denied the S-1 withdrawal request and later held, over the dissent of Commissioners Peirce and Uyeda, that Commission approval was required to withdraw the Form 10.

The SEC ultimately reversed course in February 2026, granting withdrawal of the Form S-1 and finding that American CryptoFed DAO effectively withdrew its Form 10 in July 2022. The SEC then dismissed the administrative proceedings as moot. In doing so, the agency cited significant changes in the federal government’s approach to crypto regulation, including enactment of the GENIUS Act, Executive Order 14178, supporting the responsible growth and use of digital assets, and recommendations from the President’s Working Group on Digital Asset Markets regarding the treatment of crypto assets under federal securities laws. The SEC stated that these developments warranted reconsideration of its prior decisions. The Commission also clarified that the dismissal does not reflect a determination as to whether American CryptoFed DAO’s digital tokens are securities. 

Topic 4: SEC Clears the Way for Continuous Trading and Expanded Listings

Key Takeaway: Recent SEC actions involving WisdomTree and Nasdaq reflect the agency’s growing willingness to accommodate tokenization initiatives within existing securities law and market structure frameworks.

On February 23, 2026, the SEC granted exemptive relief to WisdomTree permitting its tokenized money market fund, the WisdomTree Treasury Money Market Digital Fund (WTGXX), to offer continuous, 24/7 trading with instant settlement. Unlike traditional mutual funds, which transact once daily at end-of-day net asset value, WTGXX shares may now be bought and sold throughout the day at a stable $1 price through a broker-dealer. The structure relies on dealer inventory and blockchain-based tokenization to facilitate continuous liquidity and immediate settlement without requiring the fund to process transactions in real time.

The approval preserves the existing regulatory framework applicable to registered investment companies while using blockchain infrastructure to modernize trading and settlement mechanics. WisdomTree described the relief as “unprecedented“ for a fund governed by the Investment Company Act of 1940. On X, SEC Chair Atkins characterized the exemption as part of the agency’s broader effort to promote capital markets innovation and tokenization initiatives.

Separately, the SEC approved a proposed Nasdaq rule change permitting certain securities to be traded and settled in tokenized form through a limited pilot program operated by the Depository Trust Company (DTC). The approval does not create a new class of digital securities; instead, it permits certain existing securities (primarily Russell 1000 stocks and certain major index ETFs, such as the S&P 500 index and Nasdaq-100 index) to settle in either traditional or tokenized form. 

Under the framework, market participants may indicate a preference for tokenized settlement when they enter their orders, after which Nasdaq communicates that preference to DTC after the trade is executed. DTC then determines whether the transaction can be completed in tokenized form under the parameters of the pilot program. If either the participant or the security is ineligible, or if DTC cannot execute the tokenization preference for other reasons, the trade simply settles in traditional form.

Importantly, the introduction of tokenization does not change how securities trade on Nasdaq. Tokenized and nontokenized shares remain fully fungible, trade on the same order book, and carry identical economic and governance rights, including voting and dividend rights. Settlement timing, fees, surveillance, and overall market structure likewise remain unchanged. In approving the proposal, the SEC concluded that the rule change is consistent with the Exchange Act, including Section 6(b)(5)’s requirements related to investor protection and market integrity. The order reflects the SEC’s broader effort to integrate blockchain-based settlement functionality into existing securities market infrastructure.

The approval also aligns with the Depository Trust & Clearing Corporation’s (DTCC’s) ongoing efforts to modernize post-trade market infrastructure through tokenization. The DTCC recently announced that the pilot program is expected to commence in July 2026, with a broader production launch anticipated in October 2026. While the pilot remains limited in scope, it signals continued momentum toward the use of tokenization in traditional financial markets and provides a framework for evaluating its potential role in future securities settlement processes.

Topic 5: CFTC and Gemini Trust Jointly Move to Vacate Consent Order

Key Takeaway: The CFTC’s acknowledgement that the Gemini consent order should never have been entered in the first place is significant not only for Gemini, but also for the digital asset industry more broadly, because it signals a meaningful shift in how regulators are approaching enforcement actions in this space and raises important questions about due process and institutional accountability in prior agency conduct.

On May 27, 2026, the CFTC announced that it joined Gemini Trust Company LLC in a joint motion for relief from the consent order entered in CFTC v. Gemini Trust Company LLC in the U.S. District Court for the Southern District of New York. The original complaint was filed in June 2022, and the parties entered into a consent order in January 2025. In an unusual and notable step, the CFTC has publicly acknowledged that the complaint should not have been filed and would not have been filed under current enforcement standards.

The CFTC’s reversal follows a comprehensive internal review of the investigation, the evidence, and the charging decision. That review identified serious procedural and substantive deficiencies in how the matter was pursued. Among other findings, the CFTC determined that the complaint was based in significant part on a whistleblower whose credibility was known to be questionable, that the investigation targeted Gemini — which was itself a victim of fraud — rather than the alleged bad actors, and that the evidentiary record against Gemini was weak. The review also found that a commissioner was denied requested evidentiary support ahead of the vote to file the complaint, that litigation counsel improperly invoked the deliberative process privilege to prevent Gemini from mounting an adequate defense, and that CFTC personnel misused the agency’s regulatory authority to gain settlement leverage.

The parties are now jointly seeking to vacate the prospective provisions of the consent order, including its injunctive relief. The $5 million civil monetary penalty Gemini previously paid will not be refunded. The CFTC expressly noted that this outcome reflects the federal government’s broader revised approach to digital asset enforcement, which has resulted in the resolution of numerous digital asset investigations and cases across multiple agencies. 

SEC Cracks Down on Bitcoin Latinum Offering

Key Takeaway: In line with its revised enforcement priorities to combat misconduct harming investors in the context of crypto assets, the SEC filed a lawsuit against the founder of Bitcoin Latinum and two entities he controlled, alleging that they defrauded hundreds of investors in a $16 million offering of future rights to Bitcoin Latinum. The lawsuit, one of the SEC’s few enforcement actions under the Trump administration, emphasizes a continued agency priority to focus on investor protection and combating instances of fraud.

On April 17, 2026, in the US District Court for the Eastern District of New York, the SEC charged Bitcoin Latinum (LTNM) founder Donald G. Basile and two entities he controlled, GIBF GP, Inc., and Monsoon Blockchain Corporation, with securities fraud for their roles in a $16 million offering of Simple Agreements for Future Tokens (SAFTs) providing investors future rights to receive LTNM once GIBF, in its sole discretion, declared that a certain operational milestone was satisfied. According to the complaint, the defendants repeatedly made false and misleading statements during the offering that LTNM was “the world’s first insured digital asset” and that LTNM was asset-backed by an existing trust and asset pool. The defendants also allegedly promised investors that 80% of proceeds from the offering would be used to support the value of LTNM. In reality, LTNM had no insurance coverage or asset backing. And rather than using 80% of offering proceeds to support LTNM, Basile allegedly used at least half of the funds on personal purchases, including a condo in Miami, Florida; a house in Park City, Utah; a personal credit card bill; and a horse for his daughter. Investors never received LTNM because GIBF never declared the milestone. Over time, and after investors filed a private fraud lawsuit over the SAFT offering, the defendants abandoned their efforts to promote LTNM, and LTNM became valueless.

The SEC seeks disgorgement of ill-gotten gains plus prejudgment interest and civil monetary penalties against all defendants, which include Basile and the two defendant-entities in his control. It also seeks an injunction barring all defendants from participating in securities offerings and certain other transactions, permanent injunctive relief against all defendants from violating the federal securities laws and rules alleged in the complaint, and an officer-director bar against Basile. On June 15, 2026, the defendants filed a letter notifying the court of their intent to move to dismiss the complaint and requested that the case be assigned to a district judge.

The SEC brought this action 10 days after announcing a “course correction” in its crypto asset oversight strategy, under which the SEC will remain “committed to detecting, deterring, and bringing actions against those seeking to take advantage of investors by misusing new technologies.” The announcement criticized the previous Commission’s pursuit of crypto-related enforcement actions for regulatory violations that did not allege investor harm or provide a direct benefit to investors. This action fits squarely within the SEC’s strategic shift and illustrates the SEC’s commitment to holding individuals and entities accountable for active investor deceit.

Signals New Approach to Wallet Regulation With First No-Action Letter for Self-Custodial Crypto Wallet Provider

Key Takeaway: The CFTC issued its first no-action letter to a self-custodial crypto wallet provider, Phantom Technologies Inc., granting it relief from complying with broker registration requirements under the CEA. The letter represents a shift in the CFTC’s approach toward crypto technology vendors from enforcement-driven action to collaborative boundary-setting engagement. 

On March 17, 2026, the CFTC’s Market Participants Division issued a no-action letter to Phantom Technologies Inc. (Phantom), a developer of self-custodial crypto wallet software operating across Bitcoin, Ethereum, and Solana. Phantom’s “software enables users to generate and manage cryptographic credentials for viewing, storing, and conducting self-directed crypto asset transactions” and “provides a user interface for customers to transmit transaction instructions to crypto asset trading protocols and other decentralized applications.” In its correspondence with the CFTC, Phantom sought clarity on whether it could engage in the following additional business activities without running afoul of the CEA:

1. Develop and distribute front-end interface software allowing users to view market data, product offerings, and submit orders directly to registered exchanges.
2. Contract with any designated contract market (DCM) or registered futures commission merchant (FCM) or introducing broker (together, “collaborators”) and receive revenue sharing or charge users a transaction-based fee in exchange for providing the software. 
3. Introduce and solicit users to engage with specific collaborators, including promoting particular derivatives contracts. 
4. Market its services at industry conferences, on social media, and through other promotional channels, subject to internal preapproval and supervision. 
5. Offer an interface as a standalone product or embedded feature of its existing wallet software, provided Commission-regulated activity is clearly distinguished to users.

The letter confirmed that the CFTC will not take action against Phantom for the listed activities provided that Phantom does not undertake the following business activities, among others:

1. Hold, control, or maintain custody of user assets at any point. 
2. Generate buy/sell signals or exercise any discretion over the routing or execution of user orders. 
3. Restrict user access to collaborators in any way.
4. Take the above actions with respect to decentralized finance (DeFi) derivatives or noncustodial trading arrangements outside a DCM or FCM structure. 

Notably, the scope of the letter is carefully bounded: It applies only to Phantom’s noncustodial arrangement with a registered exchange partner and does not extend to DeFi derivatives or tokenized prediction markets. The letter’s significance extends beyond the immediate relief granted to Phantom because it provides broader insight on how the CFTC is approaching technological developments and innovation. From an industry perspective, the letter meaningfully clarifies what activities are permitted and what compliance steps the CFTC expects of companies pursuing a similar pathway. Chair Selig made the initiative to provide clarity to companies clear on X, stating that “[a]s America cements its position as the crypto capital of the world, clear rules of the road for software developers are critical.” He stated that this letter “delivers long-overdue clarity for non-custodial digital wallet software providers.”

Topic 1: SDNY Same Tosses Uniswap Claims in Risley III, Narrowing Developer/Protocol Liability

Key Takeaway: A recent SDNY decision dismissing claims against Uniswap Labs reinforces growing judicial skepticism toward attempts to impose liability on developers and infrastructure providers for misconduct committed by independent third parties using decentralized protocols.

In a recent decision from Judge Katherine Polk Failla of the US District Court for the Southern District of New York (Risley III¹), the court dismissed claims for aiding and abetting fraud and negligent misrepresentation, violations of consumer protection statutes, and unjust enrichment brought against Uniswap Labs and its CEO arising from their development and operation of the Uniswap Protocol, a decentralized cryptocurrency exchange that unidentified token issuers used to sell allegedly fraudulent tokens to the plaintiffs.

The court rejected the plaintiffs’ theory that the defendants could be held liable for the “misconduct of unidentified third-party [token] issuers” simply because the defendants built the platform those issuers exploited. Judge Failla held that providing a platform on which fraud occurs is categorically distinct from substantially assisting that fraud and insufficient to state claims “for the same reasons why a bank does not substantially assist a money launderer who washes his cash through the bank’s accounts, and why WhatsApp does not substantially assist a drug dealer who coordinates a sale on its messaging service: Simply providing the platform on which a fraud takes place is not the same as substantially assisting that fraud.” The court emphasized that “merely creating an environment where fraud could exist” or passively “‘allowing’ fraud to occur” does not amount to affirmative “assist[ance] in [the fraud’s] perpetration.”

Judge Failla also dismissed claims brought under New York General Business Law § 349 and analogous state consumer protection statutes on several independent grounds, finding that the plaintiffs failed to allege affirmative misstatements, omissions, or causation sufficient to support claims. Critically, with respect to causation, the court found that the plaintiffs did not establish that their losses were traceable to the alleged fraudulent conduct of the token issuers — and not traceable to any act or omission by the developers of the exchange — and that the plaintiffs’ own pleadings repeatedly attributed their injuries to the issuers’ misconduct.

The unjust enrichment claims were dismissed on the ground that the plaintiffs failed to allege a specific and direct benefit conferred on the defendants. The court rejected the plaintiffs’ theory that the defendants had “played the long game” by tolerating fraudulent activity to later attract legitimate users and transaction volume, finding this causal chain “too . . . attenuated” to support a claim for unjust enrichment.

The decision makes clear that courts are willing to treat platform-level infrastructure providers as categorically distinct from parties who have direct transactional relationships with wrongdoers.

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1. ^[1] Risley v. Universal Navigation Inc., 2026 WL 572065 (S.D.N.Y. Mar. 2, 2026). Risley III is the third time a court has ruled on the merits of plaintiffs’ claims in this litigation. The first decision, Risley I, dismissed the plaintiffs’ federal securities claims and declined to exercise supplemental jurisdiction over the accompanying state law claims. 690 F. Supp. 3d 195 (S.D.N.Y. 2023). On appeal, in Risley II, the Second Circuit affirmed dismissal of the federal securities claims, reasoning that it “defies logic” to hold a software developer liable for “a third-party user’s misuse of the platform.” 2025 WL 615185 (2d Cir. Feb. 26, 2025). In that same decision, the Second Circuit remanded for further consideration of the state law claims after finding that the district court had subject matter jurisdiction over those claims under the Class Action Fairness Act. ↩

Topic 2: $JENNER Token Created and Promoted by Caitlyn Jenner Is Not a Security

Key Takeaway: The US District Court for the Central District of California dismissed with prejudice a class action claim that Caitlyn Jenner’s $JENNER meme coin constituted an unregistered security under federal law, finding that the lead plaintiff failed to plausibly plead that $JENNER tokens are securities under the Howey test. The court found that $JENNER failed at least the “common enterprise” prong of Howey. The court reasoned that $JENNER’s value depends on Jenner’s promotion of the tokens using her fame rather than any pooling or use of investor funds, and Jenner earns revenue from $JENNER transactions regardless of investor profits or losses. The court noted that its conclusion is consistent with the SEC’s recent interpretive rule regarding the application of securities laws to crypto assets, including the rule’s use of meme coins as examples of “digital collectibles” that “have limited or no functionality” and whose values are “driven by supply and demand rather than any essential managerial efforts of others.”

On April 16, 2026, in a class action lawsuit asserted against Caitlyn Jenner and her manager, Judge Stanley Blumenfeld Jr., dismissed with prejudice the lead plaintiff’s claim that the defendants’ sale of the $JENNER meme coin constituted the sale of unregistered securities in violation of the Securities Act of 1933. The court held that the plaintiff failed to plausibly plead that $JENNER tokens are securities under the Howey test, which requires (1) an investment of money (2) in a common enterprise (3) with an expectation of profits produced by the efforts of others. Noting that defendants did not dispute the investment of the money prong, the court found that the plaintiff at least failed to establish a common enterprise. The court did not opine on the expectation of the profits prong.

Under Ninth Circuit law, a common enterprise may be established through horizontal commonality (where investor interests are pooled and potentially used to increase the value of an investment) or through vertical commonality (where the fortunes of investors and promoters are linked). The court found that there is no horizontal commonality among $JENNER investors because investor funds are not pooled or used to develop a product or technology related to $JENNER. Rather, $JENNER is a meme coin marketed as being “intended solely for entertainment purposes,” and $JENNER’s value depends on the demand Jenner generates by using her fame and influence to promote it. The court also found that there is no vertical commonality between Jenner and $JENNER investors because Jenner’s success from $JENNER tokens does not correlate with investors’ profits or losses. Jenner receives a percentage tax on $JENNER transactions and, accordingly, benefits from all $JENNER transactions regardless of whether investors profit or lose.

After briefing and oral argument on defendants’ motion to dismiss concluded, on March 17, 2026, the SEC published an interpretive rule, “Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets,” which included an assessment that meme coins constitute nonsecurity crypto assets (discussed above). Among other things, the interpretive rule identified meme coins as examples of “digital collectibles [that] have limited or no functionality” that are “typically acquired for artistic, entertainment, social, and cultural purposes, and their value is driven by supply and demand rather than any essential managerial efforts of others.” The defendants notified the court of the interpretive rule by filing a Notice of Supplemental Authority. The lead plaintiff submitted a response, arguing that the rule did not alter the Howey analysis; did not create a categorical exemption for meme coins; and in any event supported the plaintiff’s allegations that the defendants had promoted $JENNER through specific promises of development, marketing, exchange listings, and other efforts intended to increase the token’s value. The court referenced the rule in a footnote in its opinion, noting that the court’s conclusion was consistent with the rule (including its characterization of meme coins). However, the court stated that it did not rely on the rule because it was not yet published in the Federal Register and therefore was not binding.

Topic 1: Crypto ATM Crackdown Builds Over Fraud and Money-Laundering Concerns

Key Takeaway: Cryptocurrency ATMs have become a focal point for federal and state enforcement authorities. A series of recent actions highlight the government’s view that cryptocurrency ATMs may serve as conduits for money laundering and wire fraud. The actions also emphasize the regulators’ perspective that cryptocurrency ATM operators should bear significant responsibility for preventing their platforms from being exploited, particularly regarding vulnerable populations such as older adults, who have been disproportionately targeted for schemes perpetrated through these kiosks. Below, we summarize three notable enforcement actions and discuss their implications for digital asset businesses. 

1. Northern District of Illinois: $10 Million Crypto ATM Money Laundering Indictment 

In November 2025, the US Attorney’s Office for the Northern District of Illinois unsealed a federal indictment charging Firas Isa and his Chicago-based company, Virtual Assets LLC (d/b/a Crypto Dispensers), with conspiring to launder at least $10 million in proceeds from wire fraud and narcotics offenses. 

According to the indictment, Isa and his company operated a cash-to-cryptocurrency exchange network, including a nationwide chain of crypto ATMs that allowed users to convert cash, checks, and other monetary instruments into digital assets. 

The indictment arrived amid growing state-level legislative activity. In Illinois, Governor JB Pritzker recently signed legislation requiring crypto ATM operators to register with the state, capping transaction fees at 18% and limiting daily transactions to $2,500 for new users. Similar federal prosecutions, such as the 2023 Ohio indictment of Sonny Meraban, have underscored the risk that crypto kiosks can be exploited by scammers and criminal networks to move illicit funds. 

2. District of Columbia: State Attorney General Lawsuit Against Athena Bitcoin 

In September 2025, District of Columbia Attorney General Brian L. Schwalb filed a consumer protection lawsuit against Athena Bitcoin, Inc., one of the largest Bitcoin Teller Machine (BTM) operators in the United States. The complaint alleges that Athena financially exploited District of Columbia residents through its crypto ATM network. 

The complaint describes a common scam pattern: Perpetrators contact victims by phone impersonating bank officials or government agents and instruct them to deposit funds into a crypto ATM to “protect” their accounts or assist in a purported “government investigation.” The scammers create a sense of urgency, pressure victims not to tell anyone, and direct them to crypto ATMs specifically because deposits transfer directly to the scammer’s wallet, bypassing traditional financial intermediaries and their associated fraud protections.

According to the Office of the Attorney General (OAG), 93% of all Athena BTM deposits during the company’s first five months of operation in the District were linked to scams, many of which targeted seniors and vulnerable adults. The OAG alleges that nearly half of all deposits were flagged internally by Athena as potentially fraudulent, with the median age of victims at 71 and the median loss per scam transaction at $8,000.

The complaint further alleges that Athena charged undisclosed fees of up to 26% per transaction, often characterized as a “transaction service margin,” and enforced a blanket “no refunds” policy even when victims reported that they had been scammed. Critically, the OAG alleges that Athena was aware that its safeguards were insufficient to prevent fraud but continued to operate its machines, effectively enabling criminals to exploit users. 

The lawsuit alleges violations of the District of Columbia Consumer Protection Procedures Act and the Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act. 

The OAG seeks to recover funds lost by victims and to prevent Athena from profiting from scam-related transactions. 

3. California DFPI Consent Order: Coinme Inc. 

In January 2026, the California Department of Financial Protection and Innovation (DFPI) issued a consent order against Coinme, Inc., a major operator of crypto ATMs across the state. The action was the first enforcement proceeding under California’s Digital Financial Assets Law (DFAL), enacted in 2023 to address risks associated with crypto kiosk transactions. 

The order is significant both as a regulatory enforcement milestone and as a public signal that California intends to actively police crypto kiosk operations, with a particular focus on protecting older adults from increasingly sophisticated fraud schemes. 

DFPI’s investigation found that Coinme accepted transactions exceeding $1,000 per customer per day, in violation of DFAL’s daily transaction limit. The $1,000 daily transaction limit at crypto kiosks in California is a provision of the DFAL, specifically Senate Bill (SB) 401. It was designed to prevent fraudulent transactions and reduce the risk of kiosks being used for illicit purposes, such as elder fraud. The DFAL’s $1,000 daily limit applies to all customers using crypto kiosks, including individuals, verified users, and institutional operators. There is no explicit exemption in the current law for verified or institutional users that would allow them to bypass the $1,000 cap.

DFPI’s investigation also found that Coinme failed to include required disclosures on customer receipts, including the identity of the digital asset exchange used to determine transaction spreads. DFPI deemed both practices unfair, deceptive, or abusive under the California Consumer Financial Protection Law. Under the consent order, Coinme is required to cease accepting more than $1,000 from any single customer per day; ensure all receipts include the disclosures mandated by DFAL; pay $51,700 in restitution to an affected elderly California resident; pay a $300,000 administrative penalty, with restitution credited toward the total; and implement policy changes, submit periodic reports to DFPI, and waive hearing rights. 

In announcing the action, DFPI emphasized that crypto kiosks are increasingly exploited in tech support scams, government impersonation schemes, romance and emergency scams, and other fraudulent schemes.  

The DFAL was designed to mitigate risks inherent in digital asset transactions, particularly those exploited by scammers. By imposing daily transaction limits and requiring clear disclosures, the law aims to reduce opportunities for fraud and protect vulnerable consumers. The Coinme order emphasizes that DFPI will continue to use the DFAL aggressively, and operators should expect heightened scrutiny of their compliance programs.

Topic 2: Prediction Markets May Face Additional Insider Trading Scrutiny After Polymarket Prosecutions

Key Takeaway: Two recent prosecutions arising from trades placed on Polymarket signal that US authorities are increasingly willing to apply traditional fraud and insider trading theories to prediction markets, particularly where traders allegedly exploit confidential government information or other nonpublic events data.

On April 23, 2026, federal prosecutors in the Southern District of New York charged US Army Master Sergeant Gannon Ken Van Dyke with allegedly using classified information to place profitable bets on Polymarket tied to the capture of Nicolás Maduro, former president of Venezuela. According to public reports, Van Dyke allegedly participated in planning and executing the underlying military operation while simultaneously placing trades predicting Maduro’s removal and related US military activity in Venezuela, generating more than $400,000 in profits on the prediction market platform. Prosecutors alleged that Van Dyke attempted to conceal the activity through VPN usage, cryptocurrency transactions, and offshore accounts. The CFTC filed a parallel civil complaint the same day, alleging similar conduct.

On May 27, 2026, the Southern District of New York unsealed another criminal complaint against Michele Spagnuolo, a Google software engineer, charging him with commodities fraud, wire fraud, and money laundering in connection with alleged insider trading on Polymarket. The CFTC filed a parallel civil complaint the same day. According to the government, Spagnuolo used confidential access to Google’s proprietary “Year in Search” search-trend data — information restricted within Google due to its commercial value — to trade event contracts on Polymarket predicting who would be the most-searched people on Google in 2025. Trading under the pseudonym “AlphaRaccoon,” Spagnuolo allegedly risked approximately $2.75 million across 25 prediction-market outcomes and profited around $1.2 million after the markets resolved. The complaint further alleges that Spagnuolo attempted to conceal his gains through a series of cryptocurrency swaps and transfers to privacy-preserving services.

These back-to-back enforcement actions send a clear message that prediction-market insider trading is a priority for both the Department of Justice and the CFTC and that the government will pursue these cases aggressively across a broad range of information types and geographies. Although traditional securities laws were not designed for prediction markets, regulators appear increasingly willing to rely on commodities fraud, wire fraud, and misuse-of-confidential-information theories where traders allegedly exploit material nonpublic information tied to geopolitical, military, or governmental events. Public reporting also indicates that both regulators and prediction market operators are investing more heavily in surveillance and blockchain analytics tools designed to identify suspicious trading activity. 

These prosecutions also arrive amid broader debates over the legal status and regulation of prediction markets in the United States. As platforms such as Polymarket and Kalshi continue expanding into politically and economically sensitive event contracts, lawmakers and regulators are increasingly confronting questions regarding market integrity, gambling law preemption, and the extent to which traditional insider trading concepts apply to decentralized, event-driven trading markets. In the wake of these actions, companies should also assess whether their insider-trading, confidentiality, and personal-trading policies explicitly address prediction markets and event contracts.

Topic 1: Momentum Returns to Crypto Market Structure and Tax Reform Efforts

Key Takeaway: Renewed action on the CLARITY Act in the Senate, securities law guidance (as discussed above), and legislative movement on crypto-specific tax issues have spurred industry optimism that Congress will potentially pass market structure reform before the midterm elections — though prediction markets show broader skepticism. The advancement of the CLARITY Act out of the Senate Banking Committee on a bipartisan basis suggests that lawmakers continue to view digital asset legislation as an active bipartisan priority, even as significant issues remain open that must be resolved before the bill will advance to a full Senate vote.  

After the House passed the CLARITY Act in July 2025, the bill stalled in the Senate. On January 12, 2026, the Senate Banking Committee introduced a sweeping market structure bill intended as a more comprehensive proposal than the House bill. The breadth of the bill, however, proved to be both its ambition and its obstacle. Industry consensus fractured quickly, with several stakeholders, including Coinbase and DeFi advocates, withdrawing support. A principal point of contention was a proposed amendment to the GENIUS Act regarding the treatment of stablecoin yields and rewards. 

A subsequent attempt to advance the bill on a bipartisan basis was introduced to the Senate Banking Committee on May 12, 2026, and advanced on May 14 in a 15–9 bipartisan vote. The proposal defines all tokens as “network tokens,” excludes them from the definition of securities, and amends the CEA to incorporate digital commodities into various aspects of the CFTC’s jurisdiction and regulations. However, network tokens that continue to require the oversight, control, or operational support of a single person or entity or of a group of affiliated parties are “ancillary assets,” and their offer and sale, through primary offering and secondary trading, will require compliance with a securities law regime. The proposal for “Regulation Crypto” is also retained in the current draft as a new exemptive framework for certain offerings of network tokens deemed ancillary assets. The updated draft bill includes a compromise relating to payment of stablecoin yield: The payment of yield or interest “solely in connection with the holding of” payment stablecoins is prohibited. However, certain activity-based rewards can be offered for the use of stablecoins (such as providing liquidity for market-making activity or “otherwise putting assets at credit or investment risk”).

At the same time, lawmakers continue to evaluate long-anticipated tax reforms covering digital asset taxation. On June 9, 2026, a hearing held by the House Committee on Ways and Means heard testimony from witnesses including representatives from Fidelity Investments, Coinbase, Coin Center, and NYU Law regarding taxation issues and digital assets. This hearing follows the introduction of the bipartisan Digital Asset PARITY Act (H.R. 8899) on May 19, 2026. The proposed legislation would, among other things, make certain GENIUS-compliant stablecoin transactions tax-exempt, permit deferral of tax on staking rewards for five years, and extend wash sale rules to digital assets. 

Topic 2: Delaware Gets in the Stablecoin Game With Two-Bill Play

Key Takeaway: The Delaware Senate recently passed two bills designed to modernize the state’s banking laws to define digital assets, facilitate the ability of out-of-state banks to act as fiduciaries in the state, and create a licensing framework for payment stablecoin issuers and digital asset service providers that is aligned with the GENIUS Act.

On April 23, 2026, the Delaware Senate passed SB 16, also known as the Delaware Banking Modernization Act of 2026, which constitutes the first major revision to Title 5 of the Delaware Code since the passage of the Financial Center Development Act in 1981. The act provides greater regulatory certainty in the digital currency and blockchain space, adding definitions for digital assets and virtual currency. It defines a digital asset as “any digital representation of value which is recorded on a cryptographically-secured distributed ledger or other similar technology, including virtual currency,” and it defines virtual currency as “a digital representation of value that is used as a medium of exchange, unit of account, or store of value; and is not money.”

In addition to adding these modernized definitions to improve regulatory clarity, SB 16 expressly seeks to facilitate the relocation of out-of-state banks and out-of-state trust companies to Delaware. It does so by expanding the state bank commissioner’s authority to allow the establishment of banks and trust companies in Delaware, expanding the tools available to out-of-state entities to act as fiduciaries in Delaware and legislatively trimming the role of courts in opining on mergers and conversions. These changes appear to respond to concerns companies have raised about unpredictable outcomes at the Delaware Court of Chancery.

On the same day, the Delaware Senate also passed SB 19, the Delaware Payment Stablecoin Act, which similarly seeks to offer regulatory clarity and consistency in creating a licensing framework for stablecoin issuers and digital asset service providers operating in Delaware. Drawing from the GENIUS Act and the Office of the Comptroller of the Currency’s guidance implementing the federal statute, SB 19 establishes reserve requirements including reserve shortfall remediation cascades, mandatory redemption timing standards, capital standards, anti-money laundering obligations, data privacy statutory floors, change-in-control notice procedures, custody safeguards, a federal-to-state charter conversion pathway, and strong preemption provisions preventing cities or localities from passing more restrictive ordinances, rules, or regulations inconsistent with the act.

Topic 3: Strike Strikes NYDFS Gold With BitLicense Approval

Key Takeaway: Strike, a Bitcoin-based financial services platform, has received clearance to operate in New York, allowing the platform to offer New York individuals and businesses the ability to transact in Bitcoin and use Bitcoin as a payment device for everyday activities. 

In March 2026, Strike, a Bitcoin-focused payments and financial services platform, announced that it had received a BitLicense from the New York Department of Financial Services, permitting the company to offer Bitcoin-related payment and financial services to New York residents and businesses. According to public reporting, the approval allows Strike to expand its Bitcoin payments and remittance offerings into one of the most heavily regulated digital asset markets in the country.

The approval reflects the continued importance of state-level regulation in shaping the US digital asset industry. While federal lawmakers and regulators continue debating broader crypto market structure legislation, New York’s BitLicense regime remains a key gatekeeping framework for companies seeking access to institutional and consumer markets within the state. For more on the evolving state regulatory landscape for digital assets and financial technology companies, see this recent Goodwin publication.