Lowenstein Crypto advises leading digital asset and cryptocurrency projects, exchanges, and trading firms. Our practice covers regulatory advice, transactions and structuring advice, investigations, and adversarial matters including commercial disputes, bankruptcy, and related litigation. As these markets continue their rapid growth and market participants continue to evolve and mature their businesses, we are providing this weekly digest as a resource that highlights and summarizes a selection of key recent legal regulatory developments.
SEC Announces FY2025 Enforcement Results, Acknowledges Prior Crypto Cases Misallocated Resources
On April 7, the Securities and Exchange Commission (SEC) released its enforcement results for the fiscal year ending September 30, 2025, characterizing the period as one of significant “course correction.” The SEC filed 456 enforcement actions during the fiscal year, obtaining orders for monetary relief totaling $17.9 billion. In a notable self-assessment, the SEC stated that 95 book-and-record enforcement actions and $2.3 billion in penalties brought since FY2022, together with seven crypto firm registration-related cases and six “definition of a dealer” cases, “identified no direct investor harm from those violations, produced no investor benefit or protection,” and reflected “a misinterpretation of the federal securities laws, a misallocation of SEC resources, and a bias for volume of cases brought versus matters of investor protection.” SEC Chairman Paul S. Atkins stated that the SEC has “put a stop to regulation by enforcement and recentered its enforcement program on the SEC’s core mission.” The SEC also noted that going forward, its focus will be on market manipulation, abuses of trust, and “fraud in its many forms.” The SEC’s press release is available here.
SEC Chair Atkins Says ‘Reg Crypto’ Proposal Is One Step From Publication
On April 6, SEC Chairman Paul S. Atkins confirmed that the Commission’s proposed “Regulation Crypto Assets” framework is currently under review at the White House Office of Information and Regulatory Affairs, the final step before publication for public comment. Atkins also subsequently reaffirmed his prior public statements by dictating that the rulemaking will address fundraising and startup exemptions for early-stage crypto projects. Separately, on April 8, Treasury Secretary Scott Bessent published an op-ed urging the Senate to pass the Digital Asset Market Clarity (CLARITY) Act, stating “[e]conomic security is national security, and it is a cornerstone of CLARITY. Bringing digital-asset activity into a well-defined regulatory perimeter would strengthen oversight, improve compliance with anti-money-laundering standards and reduce user incentives to rely on opaque—and often vulnerable—offshore markets. Similarly, the software-developer protections that Clarity incorporates would ensure that the technology powering digital finance remains open, secure and domestically developed.” Bessent further wrote that “Congress has spent the better part of half a decade trying to pass a framework to onshore the future of finance. It is time for [Senate Banking] to hold a markup and send the CLARITY Act to President Trump’s desk. Senate time is precious, and now is the time to act,” in conjunction with the op-ed, on X. Bessent’s post on X is available here, and his op-ed is available here. A recording of Atkins’s remarks is available here.
The FDIC Issues NPRM To Implement GENIUS Act
On April 7, the Federal Deposit Insurance Corporation (FDIC) issued a notice of proposed rulemaking (NPRM) designed to establish a new regulatory regime for FDIC-supervised permitted payment stablecoin issuers (PPSIs) and custodians. Under the proposed standards, PPSIs must maintain identifiable reserve assets, limited to highly liquid holdings such as U.S. currency and short-term Treasury bills, on at least a one-to-one basis to fully back all outstanding stablecoins. The proposal also mandates rigorous capital, liquidity, and risk management requirements tailored to an issuer’s risk profile. Specifically, issuers must be able to demonstrate the operational capacity to facilitate redemptions within two business days. Crucially, the FDIC clarifies that while deposits held as stablecoin reserves are insured up to the $250,000 limit as corporate deposits of the PPSI, they are not eligible for pass-through insurance to individual stablecoin holders. Additionally, the rule codifies a technology-neutral approach to “tokenized deposits,” confirming they are legally classified as “deposits” under the Federal Deposit Insurance Act regardless of the underlying distributed ledger technology used. The announcement is available here.
Treasury Proposes Rule To Implement GENIUS Act’s Anti-Illicit-Finance Requirements for Stablecoin Issuers
On April 7, the U.S. Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN), issued a proposed rule to implement provisions of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act related to countering illicit finance. The GENIUS Act, signed into law in July 2025, designates payment stablecoin issuers as “financial institutions” under the Bank Secrecy Act (BSA), subjecting them to anti-money laundering (AML) program requirements, customer due diligence, transaction monitoring, suspicious activity reporting to FinCEN, and Office of Foreign Assets Control sanctions compliance. FinCEN’s proposed rule would adopt implementing regulations “tailored to the size and complexity of issuers,” including the requirement for PPSIs to establish and maintain AML and countering the financing of terrorism (CFT) programs, file suspicious activity reports, and be able to demonstrate the technical capabilities to block, freeze, and reject specific or impermissible transactions on both the primary and secondary payment stablecoin markets. FinCEN’s press release is available here.
FinCEN Proposes Rule To Fundamentally Reform Financial Institutions’ AML/CFT Programs
On April 7, FinCEN issued a notice of proposed rulemaking intended to “fundamentally reform” financial institutions’ AML/CFT programs under the BSA. The proposal retains the four existing BSA program pillars–internal policies, procedures, and controls; independent testing; a designated compliance officer; and employee training–but layers on several significant changes. Most notably, the rule would codify a risk-based approach, allowing financial institutions to “direct more attention and resources toward higher-risk customers and activities ... rather than toward lower-risk customers and activities,” a shift FinCEN characterizes as moving AML/CFT programs away from a “purely ‘check-the-box’ exercise.” The proposal also draws a new “clear distinction between establishing an AML/CFT program (design and structure) and maintaining one (day-to-day implementation)” and introduces an effectiveness standard. Under this framework, only “significant or systemic failures” to maintain a properly established program would warrant enforcement or significant supervisory action–a higher threshold than under current practice. Separately, the proposal would for the first time require federal banking supervisors to consult with FinCEN before taking certain AML/CFT enforcement or significant supervisory actions, elevating what FinCEN calls its “central role in AML/CFT supervision.” FinCEN’s press release is available here.
IMF Publishes Note Warning That Tokenized Finance Could Amplify Financial Crises
On April 2, the International Monetary Fund (IMF) published a note titled “Tokenized Finance,” arguing that tokenization constitutes “a structural shift in financial architecture rather than a marginal efficiency improvement.” The note describes how permissioned shared ledgers, programmable financial assets, and smart contract-based risk management alter the nature of settlement, liquidity, and systemic risk. While acknowledging benefits such as atomic settlement, continuous liquidity management, and embedded compliance, the IMF warned that the speed and automation of tokenized finance could compress the time available for regulatory intervention during stress events, potentially accelerating financial crises. The note singled out stablecoins as a key vulnerability, comparing them to money market funds that appear stable until confidence breaks. The IMF urged policymakers to anchor digital finance in public trust through clear policy frameworks, safe settlement assets such as central bank digital currencies, robust code governance, legal certainty, and international coordination. The IMF note is available here.
