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.
Trump Orders Federal Reserve To Review Crypto and Fintech Access to Payment Rails
On May 19, President Donald Trump signed an executive order titled “Integrating Financial Technology Innovation into Regulatory Frameworks,” directing federal financial regulators to identify within three months any rules or supervisory practices that “unduly impede fintech firms from entering into partnerships with federally regulated institutions” and within six months to take steps encouraging innovation as a result of the review. The order specifically asks the Federal Reserve Board of Governors to review how it allows uninsured depository institutions and nonbank financial firms to access payment accounts and services, and it asks the 12 Federal Reserve Banks whether they can act independently of the board to grant such accounts. If the regional Federal Reserve Banks are confirmed to have independent authority, similarly situated special purpose depository institutions and the Office of the Comptroller of the Currency (OCC)-chartered crypto trust banks could effectively shop for a sympathetic regional Fed branch rather than wait on the board. The executive order is available here.
U.S. Lawmakers Reintroduce Digital Asset PARITY Act
On May 20, Reps. Max Miller (R-Ohio) and Steven Horsford (D-Nev.) reintroduced the Digital Asset PARITY Act, the latest bipartisan attempt to update how the Internal Revenue Code treats digital assets. Drawing on the December 20, 2025 discussion draft, the bill (i) establishes a tax framework for regulated payment stablecoins so that everyday stablecoin payment transactions do not trigger gain-recognition or third-party tax reporting; (ii) clarifies source-of-income rules for digital asset trading to provide certainty for U.S. and foreign market participants; (iii) extends existing securities-lending tax rules to digital assets so that bona fide crypto lending transactions are not treated as taxable sales; (iv) expands the wash-sale rule under Section 1091 to digital assets and to notional principal contracts and derivatives referencing digital assets, disallowing losses on sales where substantially identical assets are acquired within 30 days before or after—with the PARITY version applying prospectively to tax years beginning after enactment; (v) reserves a section for application of the constructive-sale rules under Section 1259 to digital assets; (vi) allows mark-to-market elections for digital asset traders and dealers; (vii) creates an elective framework for staking and mining rewards, treating rewards as income but permitting deferral of taxation to address liquidity and “phantom income” concerns at the point of receipt; and (viii) modernizes charitable contribution rules by distinguishing highly liquid digital assets from speculative or illiquid tokens to prevent abuse while supporting legitimate giving. The bill also delegates targeted regulatory authority to the Treasury to prevent abuse while reducing administrative burdens. The December 2025 discussion draft is available here, and Miller’s press release on the underlying framework is available here.
South Carolina Enacts Digital Asset and Anti-CBDC Statute
On May 19, Gov. Henry McMaster signed S. 163, a comprehensive cryptocurrency bill adding a new Chapter 47 to Title 34 of the South Carolina Code. The statute (i) prohibits any governing authority in the state from accepting or requiring payment using central bank digital currency (CBDC) or participating in a CBDC test or pilot; (ii) affirms the right of individuals and businesses to use digital currency for transactions; (iii) bars disparate tax treatment of digital assets, requiring that digital-currency transactions be taxed only on the same basis as transactions denominated in U.S. legal tender; (iv) imposes zoning, electric-grid, and Public Service Commission information-reporting requirements on digital asset mining businesses; and (v) provides protections for digital asset mining operations and “mining as a service” providers. The bill text is available here.
Minnesota Authorizes State-Chartered Banks and Credit Unions To Provide Crypto Custody
On May 15, Gov. Tim Walz (DFL) signed HF 3709, making Minnesota the first Midwestern state to enact a unified legislative framework permitting state-chartered banks and credit unions to provide regulated digital asset custody services beginning August 1, 2026. The law authorizes state-chartered banks to provide virtual asset custody in either a fiduciary or a non-fiduciary capacity and permits credit unions to operate in a custodial non-fiduciary capacity, expressly defining custody services to include the safekeeping, controlling, or managing of digital assets and their cryptographic private keys. Institutions must provide 60 days’ advance written notice to the Minnesota commissioner of commerce detailing internal risk-management and cybersecurity frameworks before launching services. The same day, Walz signed SF 3868, a bipartisan bill imposing a statewide ban on virtual currency automated teller machines and kiosks effective August 1. HF 3709 is available here, and SF 3868 is available here.
Sen. Warren Presses OCC on National Trust Charters for Crypto Firms
On May 19, Senate Banking Committee Ranking Member Elizabeth Warren (D-Mass.) sent a letter to Comptroller of the Currency Jonathan Gould demanding an explanation for the OCC’s grant of national trust bank charters to at least nine crypto firms since December 2025. Warren argued that the chartered firms “are effectively crypto banks that want to evade the fundamental safeguards and obligations that come with being a bank,” pointing to business plans that, in her view, contemplate non-fiduciary custodial activities, payments and lending facilitation, and stablecoin operations “closely related to deposit-taking” rather than the fiduciary trust activities a national trust charter is designed to authorize. She framed the OCC’s approach as “regulatory arbitrage” that conflicts with the National Bank Act and creates risks to consumers, banking-system safety and soundness, and the separation of banking and commerce. Warren asked the OCC to produce by June 1, 2026, full charter applications for all nine approved firms; the legal analyses supporting each approval; and any communications between OCC officials and President Trump or members of his family relating to the charter approvals, a reference she has previously tied to the pending charter track for World Liberty Financial. Warren’s press release announcing the letter is available here, and the full letter to Gould is available here.
Bank of England and FCA Set Out UK Tokenization and Stablecoin Vision
On May 18, the Bank of England and the Financial Conduct Authority (FCA) issued a joint call for input setting out a shared vision for tokenization in UK wholesale financial markets and seeking public feedback on where existing rules and infrastructure support or constrain the safe use of distributed ledger technology. Together with the call for input, the bank’s Prudential Regulation Authority issued a letter confirming that tokenized traditional assets should generally receive the same prudential treatment as their non-tokenized equivalents—regardless of whether they are issued on permissionless blockchains—provided the legal rights conferred are identical and the underlying risks are comparable. The bank also published a parallel consultation on extending the settlement hours of its Real-Time Gross Settlement and Clearing House Automated Payment System programs toward continuous operation. The bank signaled it will consider eligibility of tokenized assets (including the planned Digital Gilt Instrument) as central bank collateral and will set out its policy considerations in Q3 or Q4 2026.
The next day, on May 19, Bank of England Deputy Governor for Financial Stability Sarah Breeden elaborated on this vision, describing a “multi-money system” combining traditional bank deposits, tokenized bank deposits, regulated stablecoins, and potentially a retail central bank digital currency. Breeden announced that the bank plans to publish draft rules for systemic stablecoins next month and to finalize them by year-end, and she signaled that the bank may impose temporary limits on the total amount of stablecoins that can be issued to mitigate early adoption risks. The FCA and the Bank of England joint press release is available here, the full text of Breeden’s speech is available here, and the FCA’s Progressing Fund Tokenisation Policy Statement is available here.
European Commission Opens MiCA Review Consultation
On May 20, the European Commission opened a public and targeted consultation on whether Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA), which became fully applicable on December 30, 2024, “remains fit for purpose” in light of the continued evolution in digital asset markets and a significantly changed global regulatory landscape. The consultation, open through August 31, runs on two parallel tracks—a public consultation for individuals and a targeted consultation for firms, financial institutions, regulators, and industry bodies—and covers MiCA’s core building blocks, including the rules for crypto-asset issuers, asset-referenced tokens, e-money tokens, and crypto-asset service providers. The consultation lands ahead of the July 1, 2026 expiration of national transitional regimes under Article 143(3). The targeted consultation document is available here, and the commission’s announcement is available here.
