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.
Chinese Tariff Headlines Coincide with Major Crypto Liquidations
On Oct. 10, headlines signaling a potential 100% tariff on Chinese imports effective Nov. 1 preceded a broad sell-off in major digital assets that several market desks described as one of the largest crypto liquidation episodes to date. The announcement, in part, led to approximately $18 billion in liquidations within 24 hours, as prices moved through widely watched levels and set off margin liquidations across major derivatives venues. The moves occurred alongside declines in traditional risk assets, with the Nasdaq and S&P 500 each recording their worst single-day performance in roughly six months. Despite strong year-to-date gains across digital assets, the renewed uncertainty around U.S. - China trade policy added a macro risk overhang and increased near-term volatility.
U.S. House Bill Introduced to Allow Crypto and Private Equity in 401(k) Plans
On Oct. 14, Congressman Troy Downing (MT-02) introduced the Retirement Investment Choice Act (Act) which codifies President Donald Trump’s Executive Order 14330, directing federal agencies to ease restrictions on including alternative assets, such as private equity, real estate, and digital assets like cryptocurrency, in 401(k) retirement plans. By turning the temporary executive order into permanent law, the Act could significantly expand access to crypto-exposed investment products for American retirement savers. Supporters argue that empowering fiduciaries to offer such options could enhance long-term financial security and bring substantial capital inflows to the digital asset market, while critics raise concerns about the risks of introducing volatile assets into retirement portfolios. See press release by the Office of Congressman Downing here and full text of the Act here.
California Enacts First Law to Protect Unclaimed Crypto Assets from Forced Liquidation
On Oct. 11, California Governor Gavin Newsom signed Senate Bill 822, making California the first state to explicitly protect unclaimed cryptocurrency from forced liquidation under its Unclaimed Property Law (UPL). Authored by Senator Josh Becker, the bipartisan legislation updates decades-old rules to include digital assets like Bitcoin and Ethereum, ensuring they are treated similarly to abandoned bank accounts or securities. The bill prevents exchanges and custodians from converting dormant crypto holdings into cash without consent, a move that industry advocates argued would have posed tax and compliance risks. Instead, it mandates that such assets, along with their private keys, be transferred unliquidated to a state-approved custodian. Companies must notify owners 6–12 months in advance of any escheatment, and the state may convert the assets to fiat currency only after 18–20 months. The legislation aims to modernize California’s regulatory approach while maintaining consumer protections. See the text of SB 822 here.
NYC Mayor Signs EO Establishing Digital Asset and Blockchain Office
On Oct. 14, New York City (NYC) Mayor Eric Adams signed Executive Order 57 establishing the Office of Digital Assets and Blockchain Technology within the Mayor’s office. The new office is tasked with supporting the growth of the digital asset and blockchain industry in NYC by developing strategies to strengthen the city’s role as a global hub for innovation. Its responsibilities include advising on potential policy and legislative changes, encouraging investment in coordination with the NYC Economic Development Corporation, evaluating emerging digital assets, and promoting public education on responsible usage with applicable law. The office will also collaborate with the Mayor’s Office of Technology and Innovation and other city agencies to ensure alignment on policies and services. See Executive Order here.
MIT Brothers on Trial for $25M Ethereum Exploit Amid Legal Gray Areas
On Oct. 14, the trail of MIT-educated brothers Anton and James Peraire-Bueno began in Manhattan federal court trying the alleged use of a maximal extractable value (MEV) exploit to steal $25 million in cryptocurrency in just 12 seconds. Charges include conspiracy, wire fraud, and money laundering. Prosecutors argue the brothers meticulously planned the act as a first-of-its-kind fraud, citing Google searches such as “how to wash crypto” as evidence of intent. The defense counters that the exploit was a legal tactic in an unregulated and decentralized crypto environment, emphasizing the lack of direct communication with any victims and challenging the admissibility of their search history. With both sides framing the incident either as sophisticated fraud or clever arbitrage, the trial, which is set to extend into November, highlights the legal ambiguities surrounding blockchain-based financial activity. See the full docket for United States vs. Peraire-Bueno here.
UK to Allow Asset Managers to Use Blockchain for Tokenization
On Oct. 14, the UK Financial Conduct Authority (FCA) published a roadmap supporting the adoption of tokenization in the asset management sector. The roadmap outlines how tokenized funds, which use distributed ledger technology (DLT) to represent fund units, can operate within the existing regulatory framework. It builds on the UK Fund Tokenization Blueprint, which provides guidance for implementing tokenized fund units, maintaining fund registers on DLT, and exploring blockchain based settlement models. The FCA clarified that current rules already permit tokenized fund units, and that firms can begin adopting these models without waiting for new regulations. The regulator is also committed to working with industry stakeholders to assess future regulatory needs as tokenization evolves. This initiative is part of the FCA’s broader effort to foster innovation while maintaining high standards of consumer protection and market integrity. See the FCA’s press release here. For more information, see the FCA Consultation Paper here.
