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.
Blockchain Regulatory Certainty Act Reintroduced
On May 21, Congressman Tom Emmer (R-Minn.) reintroduced the Blockchain Regulatory Certainty Act (BRCA), which aims to provide regulatory clarity and enhance blockchain development in the United States. Specifically, among other things, the BRCA seeks to solidify that digital asset developers and service providers are not money transmitters, provided they do no work with custody assets. As drafted, the bill excludes blockchain developers and related service providers from the definition of a money transmitter, financial institution, and/or subjects them to any federal or state licensing regime unless such party can exercise control over a customer’s digital assets. The bill also includes clarification on certain definitions, such as what “control” means, which is defined as having unilateral and independent legal right, authority, or ability to initiate a blockchain transaction without the approval, consent, or direction of any third party. See Congressman Emmer’s press release here and a copy of the full bill here.
Senate Advances Stablecoin Regulation Bill Following Bipartisan Amendment Agreement
On May 19, the U.S. Senate voted 66-32 to advance the GENIUS Act, a bipartisan bill that would create the first federal regulatory framework for stablecoin issuers. Sixteen Democrats joined the majority of Republicans in support after negotiators reached an agreement on amendments addressing consumer protection, limits on tech company involvement, and ethics standards for certain government employees. The bill, previously blocked by Senate Democrats, gained momentum despite ongoing concerns from some lawmakers about digital asset activity involving President Donald Trump and his associates. While critics argue the bill does not go far enough on issues like ethics and financial transparency, supporters emphasize the need for the U.S. to establish a clear regulatory stance on emerging blockchain technologies. The bill’s future in the House, where a separate stablecoin proposal is under discussion, remains uncertain. See a copy of the bill here.
Texas Moves Toward Establishing Strategic Bitcoin Reserve
On May 21, state lawmakers in Texas passed Senate Bill 21 (S.B. 21), putting Texas on track to become the third U.S. state to create a strategic bitcoin reserve. S.B. 21 now awaits a decision from Gov. Greg Abbott, who is expected to review it in the coming weeks. Lee Bratcher, president of the Texas Blockchain Council, expressed cautious optimism about S.B. 21’s prospects, noting prior discussions with the governor. If the bill is signed into law, Texas would join New Hampshire and Arizona in holding bitcoin as a state asset. Bratcher estimated the initial investment could be in the tens of millions of dollars, which he described as a conservative approach for a state of Texas’ economic scale. The funds would be managed by the state comptroller using established investment practices. The idea of a bitcoin reserve has been discussed in Texas since 2022, aligning with the state’s broader interest in digital assets and its role as a hub for cryptocurrency activity. See the official bill text here.
SEC Charges Unicoin and Executives for Fraudulent Crypto Offering
The Securities and Exchange Commission (SEC) has charged Unicoin Inc., along with CEO Alex Konanykhin, board member Silvina Moschini, and former Chief Information Officer Alex Dominguez, for misleading investors in the sale of rights certificates allegedly tied to crypto assets called Unicoin tokens and the company’s common stock. The SEC alleges the executives falsely claimed these tokens were backed by billions of dollars in real estate and pre-initial public offering equities, though the assets were worth only a fraction of that, and exaggerated fundraising figures, falsely stating they raised over $3 billion instead of the actual $110 million. Unicoin allegedly also misrepresented the securities as being registered with the SEC and aggressively promoted the offerings to over 5,000 investors through widespread advertising. See the official SEC press release regarding the matter here.
J.P. Morgan To Offer Cryptocurrency Purchases for Clients Without Providing Custody Services
On May 19, J.P. Morgan announced that it will soon allow customers to purchase cryptocurrency, although it will not offer custody services for the digital assets. This marks a shift for J.P. Morgan’s CEO, Jamie Dimon, who previously took a skeptical stance on cryptocurrencies, acknowledging customer demand despite his reservations about their value. While J.P. Morgan will not store the crypto, it plans to include the purchases in customer statements. The move aligns with broader trends in the financial sector, with competitors like Goldman Sachs and Morgan Stanley expanding into crypto services. However, J.P. Morgan decision to avoid custody raises questions about how clients’ digital assets will be safeguarded. J.P. Morgan is expected to partner with a custody provider, choosing from options like Coinbase or other traditional institutions. See more from J.P. Morgan’s 2025 Investor Day here.
SEC Issues FAQs on Broker-Dealer and Transfer Agent Rules for Crypto Assets
On May 15, the SEC’s Division of Trading and Markets issued FAQs addressing the application of broker-dealer financial responsibility rules and transfer agent regulations to crypto asset activities and distributed ledger technology. The FAQs clarify that Rule 15c3-3’s possession and control requirements do not apply to nonsecurity crypto assets and provide guidance on the net capital treatment of bitcoin and ether. The FAQs also emphasize that nonsecurity crypto assets held by broker-dealers are not protected by the Securities Investor Protection Act , highlighting associated investor risks. Additionally, the FAQs discuss the use of distributed ledger technology by transfer agents, particularly in tokenized securities. While these FAQs are an incremental step toward crypto regulation, the SEC is committed to further clarifying how broker-dealers can hold crypto assets and address the net capital treatment of other cryptocurrencies. Market participants are encouraged to provide feedback and seek further guidance from the SEC. See Commissioner Hester M. Peirce’s official statement on these FAQs here. See Lowenstein Sandler’s client alert on this topic here for additional details.
