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 Chairman Atkins Announces Joint Effort With CFTC To Develop Token Taxonomy
On Feb. 11, Securities and Exchange Commission (SEC) Chairman Paul S. Atkins testified before the U.S. House Financial Services Committee regarding the agency’s plans for cryptocurrency regulation. Atkins announced that he and Commodity Futures Trading Commission (CFTC) Chairman Mike S. Selig “intend to provide a bridge toward legislation” through the collaborative initiative known as Project Crypto. Under this joint effort, the SEC and CFTC will consider developing a token taxonomy designed to provide investors and innovators with a clearer understanding of their regulatory obligations. The agencies will also explore potential exemptions that would allow market participants to conduct transactions on-chain. Atkins expressed his support for the CLARITY Act, noting that upon its passage, the SEC stands ready to implement what he characterized as landmark legislation. The full testimony is available here.
CFTC Staff Reissues Payment Stablecoin Definition Guidance
On Feb. 6, the CFTC’s Market Participants Division announced the reissuance of CFTC Staff Letter 25-40, originally issued on Dec. 8, 2025, with a limited revision to the definition of “payment stablecoin,” clarifying that a national trust bank may serve as a permitted issuer for purposes of the no-action position. The prior version defined “payment stablecoin,” in relevant part, as “a USD-denominated stablecoin that is issued by a state regulated money transmitter or trust company.” The no-action letter pertains to certain requirements applicable to futures commission merchants (FCMs) that accept payment stablecoins and other non-securities digital assets as customer margin collateral, provided the FCM accounts for their value when determining margin requirements, and permits FCMs to hold certain proprietary payment stablecoins in segregated customer accounts as residual interest. The press release is available here.
White House Meeting Held To Break CLARITY Deadlock
On Feb. 10, representatives of major U.S. banks met with crypto industry participants at President Donald Trump’s direction to negotiate Senate market structure legislation. During the meeting, bankers presented a principles document demanding an outright ban on stablecoin rewards, including interest payments. Key sticking points remain, as bankers view stablecoin yields as a direct threat to traditional deposits, while Senate Democrats are pushing for several conditions: a ban on senior government officials’ involvement in cryptocurrency, stronger illicit finance protections, and full staffing of the CFTC, including Democratic appointees, before the agency can assume regulatory authority over the industry. The American Bankers Association press release following the event is available here.
SEC Commissioner Uyeda Provides Update on Treasuries and Tokenization
On Feb. 9, SEC Commissioner Mark T. Uyeda emphasized that tokenized securities remain fully subject to existing securities regulation, with the key challenge being to adapt rules on issuance, custody, and trading for on-chain environments. He noted that the SEC has returned to its traditional approach of providing sub-regulatory guidance and exploring exemptive relief for limited-scope pilots—the same process that previously gave rise to money market funds and exchange-traded funds. Referencing the tokenization guidance published on Jan. 28, Uyeda stated that tokenization “is no longer a theoretical exercise, but is becoming a practical reality,” reflecting the SEC’s commitment to fostering innovation while maintaining appropriate guardrails for custody, disclosure, and investor protection as assets migrate on-chain. The speech is available here, and our prior Client Alert regarding the Jan. 28 SEC guidance is available here.
UK FCA Launches Stablecoin Tech Sprint and Regulatory Sandbox Initiative
On Feb. 8, the United Kingdom's Financial Conduct Authority (FCA) closed applications for participation in a two-day stablecoin tech sprint scheduled for March 5–6, 2026. The sprint is intended to explore use cases for stablecoins in domestic and international payments, covering both retail and wholesale applications. Outputs from the sprint are expected to provide actionable insights that will directly inform future FCA policy decisions on potential stablecoin payment regulation in the UK. A separate, smaller roundtable will take place on May 15, focusing on use cases for stablecoins in trade payments and identifying associated risks, opportunities, and areas where regulation would be beneficial. Follow-up roundtables are expected throughout 2026. The FCA also launched a special cohort within its Regulatory Sandbox for firms issuing stablecoins. The Sandbox will allow issuers to test UK-issued stablecoins either with consumers live in the market or using firm data. The announcement is available here.
Hong Kong Expands Crypto Trading Framework With Margin Financing and Perpetual Contract Rules
On Feb. 11, the Securities and Futures Commission (SFC), Hong Kong’s securities regulator, issued new guidance expanding the scope of permissible activities for licensed virtual asset trading platforms (VATPs). The guidance introduces two significant developments for Hong Kong’s digital asset market. First, VATPs may now offer virtual asset financing services to securities margin clients, enabling leveraged trading of digital assets within the existing regulatory framework for margin lending. Second, the SFC established a high-level framework to guide VATPs in developing and offering perpetual contracts. To manage risk during the initial rollout, the SFC has restricted the offering of perpetual contracts to professional investors only. The press release is available here.
China Expands Crackdown on Virtual Currencies, Stablecoins, and RWA Tokenization
On Feb. 6, Chinese authorities declared that all activities related to virtual currencies constitute “illegal financial activities” and are strictly prohibited in China. The notice prohibits any entity or individual, whether domestic or foreign, from issuing stablecoins pegged to the yuan abroad without approval from the relevant departments, and it bars domestic entities and their overseas subsidiaries from issuing virtual currencies outside China. The notice also addresses real-world asset tokenization (RWA tokenization), prohibiting such activities and related intermediary and IT services in China except where they rely on specific financial infrastructure and have obtained regulatory approval. Critically for U.S. firms, overseas entities and individuals are expressly banned from providing RWA tokenization services to domestic Chinese entities in any form, and no entity may engage in RWA tokenization business abroad without first obtaining consent and completing filings with Chinese authorities. The translated notice is available here.
