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.

Wyoming Becomes First U.S. State to Launch Stablecoin

On August 19, the Wyoming Stable Token Commission (WYSTC) announced the mainnet launch of the Frontier Stable Token (FRNT), marking a historic moment for Wyoming as the first U.S. state to launch a blockchain-based stablecoin. FRNT is fully backed by U.S. dollars and short-duration Treasury securities held in trust for the benefit of FRNT stablecoin holders, pursuant to W.S. 40-31-106. In connection with the launch of FRNT, the WYSTC has engaged technology and other service providers, including Franklin Advisers, to manage the cash and cash equivalent reserves, and LayerZero as a technology partner. FRNT will launch on several public blockchain networks, including Ethereum, Polygon, and Solana. For additional information, please visit WYSTC’s website here and the press release here.

New York Lawmaker Proposes Unwavering Crypto Transaction Tax To Fund Substance Abuse Programs

On August 13, New York State Assembly Member Phil Steck introduced a bill proposing a 0.2 percent tax on all cryptocurrency transactions, including those involving stablecoins, without exemptions for everyday payments or account transfers. Steck argues that crypto is largely speculative and should not be treated differently from other taxable activities, likening it to entertainment such as baseball games, which also incur taxes. The tax, projected to raise $158 million annually, is aimed at expanding substance abuse support services in upstate New York. Critics, however, warn the bill could unintentionally penalize routine transfers between users’ own accounts and complicate compliance. While Steck remains firm on taxing high-frequency trading and shows skepticism toward crypto’s use as currency, the broader legislative outlook remains uncertain, as the New York Legislature is out of session until January. For more information, please see Bill A08966 here.

U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins Suggests Most Crypto Tokens Are Not Securities

At the Wyoming Blockchain Symposium on August 19, SEC Chair Paul Atkins stated that only a small number of crypto tokens should be considered securities, marking a significant departure from the agency’s previous stance under former Chair Gary Gensler. Atkins emphasized that a token by itself is “probably not” a security and that classification depends on how the token is packaged and sold. His remarks reflect the SEC’s evolving stance through its Project Crypto initiative, even as Congress moves forward with legislation to define crypto market structure. The House has already passed the Digital Asset Market Clarity Act, and the Senate is expected to consider its version after returning from recess in September, with bipartisan support anticipated. See the video of Atkins’ discussion here.

U.S. Treasury Seeks Public Input on Combating Illicit Crypto Activity Under GENIUS Act

On August 18, the U.S. Treasury issued a request for public comment, available until October 17, on how financial institutions can detect and prevent illicit use of digital assets. The feedback will support research mandated by the recently signed GENIUS Act, focusing on the effectiveness, costs, and potential privacy or cybersecurity risks of current and emerging tools. Treasury Secretary Scott Bessent emphasized the law’s importance for strengthening U.S. leadership in digital finance, noting that stablecoins could increase global access to the dollar and boost demand for U.S. Treasuries. The initiative signals the administration’s commitment to building a regulatory framework that supports both innovation and security in the digital asset space. See the Treasury Department’s press release here.

Acting Chairman Pham To Speak at Major Web3 Conferences in Tokyo Next Week

Acting Commodity Futures Trading Commission (CFTC) Chair Caroline D. Pham will participate in two major Web3 conferences in Tokyo later this month. On August 26 at WebX2025–Asia’s largest global Web3 conference, produced by CoinPost, Japan’s leading Web3 media outlet–she will present “Writing the Rules for Cross-Border Web3: Regulatory Framework for Global Digital Assets” and join a fireside chat titled “The Regulatory Reset: America’s New Framework for Digital Assets.” WebX2025 brings together professionals from the crypto asset, blockchain, and broader Web3 ecosystem, including companies, experts, entrepreneurs, investors, government officials, and media from Japan and around the world. In addition, Pham will speak at the Blockchain Leaders Summit Tokyo 2025 on August 27 on “How to Shape the Regulations & Policies for the Next Era of Web3.” This exclusive, invitation-only event connects Japan’s blockchain leaders with the global Web3 ecosystem, fostering high-value networking and strategic discussions aimed at driving collaboration and innovation as Japan continues to emerge as a key hub in the blockchain space. See a CFTC announcement regarding WebX2025 here and the Blockchain Leaders Summit Tokyo 2025 here.

South Korea Suspends Crypto Lending Amid Regulatory Overhaul

On August 19, South Korea’s Financial Services Commission (FSC) ordered local crypto exchanges to suspend all lending services immediately, citing significant investor risks and the absence of a formal regulatory framework. The move follows a surge in lending activity, with 27,600 users borrowing $1.1 billion in just one month, 13 percent of whom faced forced liquidation due to market volatility. Exchanges including Upbit and Bithumb have introduced aggressive lending products, prompting concerns from regulators about instability and a regulatory gray zone. The FSC pledged to introduce clear guidelines to protect users and stabilize the market, allowing current loans to be repaid or extended under existing terms. This crackdown comes alongside broader efforts by the South Korean government to regulate and expand digital finance, including plans for spot crypto exchange-traded funds and a stablecoin framework pegged to the Korean won. South Korea’s FSC’s press release can be found here; however, English translations are unavailable as of August 20.

Tether Hires Former White House Crypto Adviser Bo Hines Amid U.S. Expansion Plans

On August 19, Tether, the world’s largest stablecoin company, appointed Bo Hines, former executive director of the President’s Council of Advisers on Digital Assets, as its strategic advisor for U.S. operations. Hines, a 29-year-old Yale graduate and former congressional candidate, recently stepped down from his White House role, where he was instrumental in advancing key crypto initiatives under President Donald Trump’s second term, including the first stablecoin regulation bill and a major policy report on digital assets. Tether, which is based in El Salvador and holds over $167 billion in USDT tokens, more than 60 percent of the stablecoin market, has largely stayed out of the U.S. following regulatory actions in 2021 but is now seeking reentry amid shifting political and regulatory landscapes. As part of this renewed push, Hines will help shape Tether’s U.S. strategy, build relationships with policymakers, and support the company’s effort to comply with new rules, including the search for an auditor and plans for a new dollar-backed stablecoin targeting institutional use. See a press release by Tether here.