USDThis Week in US Crypto Law: Trump Overturns IRS Rule, SEC Eases Up
Trump Signs Resolution Overturning IRS DeFi Reporting Rule, Easing Compliance Burdens
President Donald Trump signed a resolution nullifying an IRS rule requiring DeFi platforms to report crypto transaction data, marking a significant legislative development in the cryptocurrency space. Introduced as H.J.Res.25 by Rep. Mike Carey and Sen. Ted Cruz, the resolution garnered strong bipartisan support, reflecting Trump's pro-crypto stance. The IRS’ rule had expanded the definition of "broker" to include decentralized finance entities, imposing substantial compliance burdens criticized for potentially stifling innovation and infringing on privacy. With this repeal, DeFi platforms are no longer required to report gross proceeds on Form-1099, alleviating regulatory pressures and preventing the IRS from issuing a similar rule without new congressional approval. This legislation is notable as the first cryptocurrency bill signed into law and emphasizes Trump’s commitment to reducing bureaucratic hurdles in the emerging crypto industry during his campaign.
SEC Roundtable Signals Shift Towards Friendlier Crypto Regulation Under Acting Chair Uyeda
At a recent SEC roundtable, acting Chair Mark Uyeda proposed a temporary regulatory framework for digital assets while the agency develops long-term solutions. This event, involving participants from the New York Stock Exchange, Uniswap Labs, and Coinbase, highlighted the SEC's shift from Gary Gensler's stringent stance towards a more accommodating approach. Gensler had classified most cryptocurrencies as securities and pursued legal actions against major players, but the new SEC Chair, Paul Atkins, aims to prioritize establishing a comprehensive regulatory framework for digital assets. Commissioner Caroline Crenshaw raised concerns about crypto exchanges operating multiple regulated roles, which could lead to conflicts of interest and market disruption. Discussions included jurisdictional issues between the SEC and the Commodity Futures Trading Commission regarding regulatory responsibilities, with panelists emphasizing the need for clarity to prevent investor harm stemming from regulatory uncertainty. This roundtable represents a significant change in the SEC's engagement with the crypto industry compared to previous leadership.
DOJ Disbands Crypto Enforcement Team, Shifts Focus to Targeting Criminal Activities
The US Department of Justice (DOJ) has disbanded the National Cryptocurrency Enforcement Team (NCET), which was established in 2021 under the Biden administration to investigate crypto-related crimes. This decision, announced on April 8, 2025, signifies a shift toward a more targeted approach in federal oversight of the cryptocurrency industry. Deputy Attorney General Todd Blanche stated the DOJ will focus on prosecuting specific criminal activities, such as scams and fraud, rather than imposing broad scrutiny on legitimate crypto entities. This move aligns with President Donald Trump's initiative to foster an environment conducive to crypto innovation. Regulatory agencies like the SEC and CFTC are also reassessing their policies, with SEC acting chair Mark Uyeda confirming a review of existing regulations, including the Howey Test.
Paul Atkins Confirmed as SEC Chair, Signaling Shift Toward Pro-Innovation Crypto Regulations
Paul Atkins has been confirmed as Chair of the SEC, succeeding Gary Gensler with a 52-44 Senate vote, primarily from Republicans. His appointment may signal a shift towards innovation-friendly regulations for digital assets, moving away from Gensler's enforcement-focused approach. Atkins, who has a history in the SEC and crypto consulting, aims to establish a coherent regulatory framework that balances innovation with investor protections. Under his leadership, the SEC may accelerate ETF approvals and clarify the classification of digital assets. His deregulatory stance may also affect traditional markets, reducing disclosure burdens and reevaluating accredited investor definitions.
SEC Dismisses Helium Case, Rules Tokens Aren’t Securities
The SEC dismissed its lawsuit against Nova Labs, the creator of Helium Network, determining that Helium tokens and related hardware do not qualify as securities. This ruling signals a shift in the SEC's regulatory stance, coinciding with the transition from Gary Gensler to the newly confirmed chair, Paul Atkins. The lawsuit, initiated on January 17, accused Nova Labs of violating securities laws, but the dismissal establishes a precedent regarding decentralized physical infrastructure networks, alleviating legal uncertainties for similar projects. Helium co-founder Amir Haleem characterized the SEC's actions as a failed attempt to regulate crypto. Nova Labs accepted a $200,000 settlement linked to its Series D financing without admitting wrongdoing. The case reflects a broader trend under the new Trump administration, which has seen a decline in SEC enforcement actions against crypto entities, with significant reversals affecting companies like Binance and Coinbase. Despite this news, Helium's token price remained stable at $2.76.
OpenSea Urges SEC to Define NFT Marketplaces as Non-Brokers Under Federal Law
OpenSea, a leading NFT marketplace, is urging the U.S. Securities and Exchange Commission (SEC) to clarify that NFT platforms do not fall under the definitions of exchanges or brokers under federal securities laws. In a letter to Commissioner Hester M. Peirce, OpenSea's General Counsel argued that previous enforcement approaches expanded SEC jurisdiction without addressing specific risks of NFT marketplaces. They emphasized that NFT platforms do not manage funds or assets, thus negating the need for broker regulations. OpenSea called for regulatory clarity to support U.S. leadership in the crypto space and highlighted their reliance on smart contracts for transactions.
Galaxy Digital Secures SEC Approval for Delaware Move, Nasdaq Listing Set for May
Crypto financial services firm Galaxy Digital has received SEC approval to transition its registration from the Cayman Islands to Delaware, marking a significant step in its U.S. expansion. The company plans to list on Nasdaq under the ticker GLXY, with this listing expected to follow a special shareholder meeting on May 9, 2025, where the reorganization will be voted on. If approved, the process is anticipated to conclude in mid-May. CEO Mike Novogratz emphasized this as a crucial milestone for Galaxy. Additionally, the firm recently settled with the New York Attorney General, agreeing to pay $200 million stemming from allegations of misconduct during the promotion of the Luna cryptocurrency, which collapsed in 2022. This move reflects Galaxy’s broader strategy to consolidate its operations in the U.S. and enhance its presence in the digital asset ecosystem amid ongoing regulatory scrutiny.
New York, Georgia, and California Push for Blockchain and Cryptocurrency Education and Rights
New York is considering a bill proposed by Assemblyman Clyde Vanel to explore blockchain technology for enhancing election transparency and security, aiming to prevent fraud and restore voter confidence. The state Board of Elections and the Office of Information Technology Services will assess blockchain’s potential to safeguard voter identities and ensure accurate election outcomes, with findings to be reported within a year if the bill passes. In a parallel initiative, Georgia's House of Representatives introduced a resolution advocating for K-12 education on blockchain, cryptocurrencies, and Web3, emphasizing the importance of technological literacy. Meanwhile, California has amended its digital assets bill to protect cryptocurrency owners' rights, endorsing self-custodial storage and legalizing digital assets as payment methods. If successful, this legislation could empower nearly 40 million Californians, with 95 cryptocurrency-related bills already active in 35 states, reflecting a growing trend toward regulating and supporting digital currencies.
Block, Inc. Settles for $40 Million with NYDFS Over AML Violations
Jack Dorsey's Block, Inc. has settled for $40 million with the New York Department of Financial Services (NYDFS) following an investigation into deficiencies in its anti-money laundering (AML) practices. The NYDFS uncovered "critical gaps" in Block's AML program, including inadequate risk-based controls and insufficient customer due diligence, particularly concerning high-risk Bitcoin transactions. This settlement comes after Block, Inc. previously paid $80 million to 48 state financial regulators in January for similar AML violations. The NYDFS noted that Block’s rapid growth, particularly of its Cash App, outpaced its compliance capabilities, creating significant risks. As part of the settlement, Block is required to hire an independent monitor to oversee its compliance efforts. A Block spokesperson stated that this agreement resolves all pending state money transmission license issues, asserting that the company has invested significantly in compliance enhancements, while not admitting to any findings.
Grayscale and Osprey Settle Two-Year Legal Battle Over Bitcoin ETF Promotion
Osprey Funds and Grayscale Investments have settled a two-year legal dispute over alleged violations in promoting Grayscale's Bitcoin ETF. Following a court filing on April 9, both parties are finalizing the settlement documentation, expected to conclude within 45 days. Osprey initiated the lawsuit in January 2023, claiming Grayscale misled investors regarding the certainty of converting its Bitcoin Trust (GBTC) into a spot ETF amidst regulatory uncertainties. Grayscale’s conversion was later approved by the SEC in January 2024. The settlement marks a significant resolution in the competitive landscape of Bitcoin investment vehicles, with GBTC being one of the largest in the U.S.
North Carolina Proposes Bill to Allow Crypto for Tax Payments and Economic Transactions
North Carolina lawmakers have introduced H.B. 920, the Digital Asset Freedom Act, which aims to permit the use of digital assets for tax payments and other economic transactions. The bill recognizes digital assets as valid mediums of exchange and sets criteria for eligibility, including a market capitalization of at least $750 billion and daily trading volume of $10 billion, alongside a 10-year track record of security and decentralization. This initiative is part of a growing trend in North Carolina under pro-crypto leadership, complementing previous bills that propose investing pension funds in cryptocurrencies and allowing state investments in bitcoin.
Illinois Senate Passes Bill to Regulate Crypto and Combat Fraud
The Illinois Senate passed Senate Bill 1797 (SB1797) with a vote of 39 to 17, aimed at regulating cryptocurrency firms to combat fraud and protect investors from deceptive practices like rug pulls. The bill empowers the Illinois Department of Financial and Professional Regulation to oversee digital asset businesses, requiring entities to register and disclose user fees. Senator Mark Walker emphasized the need for standards due to rising crypto fraud. This legislative move follows notable memecoin scams, including the collapse of the Libra token, which resulted in significant investor losses, underscoring the urgent need for regulatory oversight in the crypto space.
New Hampshire and Florida Move Forward with Bitcoin Reserve Bills
New Hampshire's House of Representatives recently passed Bitcoin reserve bill HB302 by a narrow 192-179 vote, positioning the state to potentially invest 10% of its general fund in Bitcoin and other digital assets. This makes New Hampshire the fourth state to pass a Bitcoin reserve bill in a legislative chamber, following Arizona, Texas, and Oklahoma. Concurrently, Florida's House Insurance and Banking Committee approved bill HB487, which aims to create Bitcoin reserves; this bill will undergo three more committee reviews before proceeding to the Florida House. Both moves reflect growing legislative support for cryptocurrency integration in state finances.
This article has been refined and enhanced by ChatGPT.
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