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 Approves Generic Listing Standards for Commodity Trust Shares
On Sept. 17, the U.S. Securities and Exchange Commission (SEC) approved new generic listing standards for exchange-traded products (ETPs) that hold spot commodities such as digital assets. This regulatory change allows these exchanges to list and trade shares of trusts holding commodities, such as digital assets, precious metals, or other commodity-based products, without requiring individual SEC approval for each product, provided they meet the new standards. Among other things, the standards include that the underlying digital asset may be held by a trust if it meets one of the following: (i) the digital asset trades on a market that is an Intermarket Surveillance Group member; (ii) the digital asset underlies a futures contract that has been made available to trade on a designated contract market (DCM) for at least six months, and the exchange has a comprehensive surveillance sharing agreement with the DCM; or (iii) or an exchange-traded fund listed on a national securities exchange that has at least 40% of its net asset value exposed to the digital asset. The move is designed to streamline the process for bringing commodity-based exchange-traded products (ETPs) to market, enhance competition, and strengthen investor protections through robust disclosure, surveillance, and liquidity requirements. See the SEC’s press release here and a copy of the order approving the generic listing standards here.
SEC, Gemini Reach Deal Over Crypto Lending Dispute
On Sept. 15, the SEC and Gemini Trust Co. (Gemini) informed the U.S. District Court for the Southern District of New York that they had reached a preliminary agreement to resolve a securities-related case filed in January 2023. The case concerns allegations that Gemini and Genesis Global Capital (Genesis) conducted an unregistered securities offering to U.S. retail investors through the Gemini Earn Program between February 2021 and November 2022. In their recent court filing, the SEC and Gemini jointly requested an indefinite stay of proceedings, pending formal approval of the proposed resolution by the commission. They also indicated that they would provide a further status update by Dec. 15 if the matter remains unresolved. The SEC had previously alleged that both companies raised substantial sums in crypto assets without registering the offerings or providing investors with disclosures as required under federal securities laws. The matter appears to be approaching resolution, particularly following a $21 million settlement between the SEC and Genesis in 2024. Earlier this year, the SEC also informed Gemini that it would not pursue enforcement action in a separate investigation. See the proposed rule here.
DFS Extends Blockchain Analytics Guidance to New York Banking Organizations
On Sept. 17, the New York State Department of Financial Services (DFS) issued new guidance encouraging banking institutions involved in virtual currency-related activities to adopt blockchain analytics tools to strengthen compliance and mitigate emerging risks. As virtual currency use grows, DFS highlights the importance of integrating these technologies to assess risk, monitor for illicit activity, enhance due diligence, and evaluate the safety of new products or services. Superintendent Adrienne A. Harris emphasized that clear regulatory expectations will support both consumer protection and the competitiveness of New York-regulated institutions. The guidance builds on previous DFS directives. See the DFS news report here and a copy of the guidance here.
FINRA Releases New Educational Initiative Providing Member Firms With Essential Knowledge on Crypto Assets and Blockchain Technology
The Financial Industry Regulatory Authority (FINRA) has launched a new Crypto and Blockchain Education Program aimed at equipping member firms and their employees with foundational knowledge on crypto assets and blockchain technology. The initiative includes self-paced e-learning courses and an in-person applied learning course developed in partnership with Georgetown University’s McDonough School of Business. Topics covered range from blockchain operations and crypto asset types to fraud schemes and regulatory considerations. Available through FINRA’s FLEX platform starting in October, the program is designed to enhance industry understanding, support compliance efforts, and help firms navigate the evolving digital asset landscape. See the FINRA news release here and more information on the program here.
Kalshi Faces Massachusetts Lawsuit Over Crypto-Linked Sports Prediction Markets
On Sept. 12, Kalshi, a prediction market platform, was sued by Massachusetts Attorney General Andrea Joy Campbell for allegedly violating state gambling laws through its sports event contracts, which resemble unlicensed sports wagering. The lawsuit claims these contracts, structured as binary options, function similar to offerings by licensed operators like FanDuel, and accuses Kalshi of using psychologically manipulative design to encourage risky betting behavior. While Kalshi previously overcame federal legal scrutiny from the Commodity Futures Trading Commission (CFTC), this state-level challenge underscores growing regulatory tension surrounding crypto-adjacent prediction markets. Kalshi defends its platform as a federally regulated and innovative financial product, vowing to fight what it sees as outdated legal opposition. A copy of the official complaint can be viewed here.
U.S. Urged to Finalize Crypto Market Structure Amid Global Progress
On Sept. 16, U.S. House Committee on Financial Services Chairman French Hill emphasized the urgency for the U.S. to establish a comprehensive regulatory framework for digital assets. With the recent enactment of the GENIUS Act and U.S. House passage of the CLARITY Act, the U.S. has begun to shift away from past regulatory uncertainty. Chairman Hill highlighted insights from bipartisan visits to Latin America and Europe, where countries are advancing digital asset use through practical applications and harmonized regulations. Latin American nations, like Argentina and Paraguay, are leveraging stablecoins and crypto mining to address inflation and boost financial inclusion, while the European Union (EU) has already implemented a unified approach through its Markets in Crypto-Assets (MiCA) legislation. Hill warned that despite U.S. market strength, without swift legislative action to support innovation and safeguard consumers, the country risks falling behind in the global digital asset race. Chairman Hill’s statement may be viewed here.
France Pushes for Stricter European Union Crypto Oversight Amid Licensing Concerns
On Sept. 15, France issued a strong warning over the future of crypto regulation in the European Union, signaling it may block some crypto firms licensed in other member states from operating domestically due to concerns about inconsistent oversight. Marie-Anne Barbat-Layani, the head of France’s financial regulator, the Autorité de marchés financiers (AMF), suggested transferring supervision of major crypto firms to the EU-wide regulator known as the European Securities and Markets Authority (ESMA), joining Italy and Austria in pushing for harmonized standards. While the EU’s MiCA regulation enables firms to operate across the bloc via a “passporting” system, France fears regulatory loopholes may allow insufficiently vetted firms to expand. The French regulator has not ruled out rejecting licenses issued elsewhere, a move it compared to an “atomic weapon” that could undermine the EU’s single market. The debate highlights a key moment for European crypto oversight as regulators weigh national control against centralized supervision to manage growing market risks. The AMF news release can be read here.
U.S. House to Consider Retroactive CBDC Ban
On Sept. 16, the U.S. House of Representatives announced that it is considering a streamlined path to prohibit the Federal Reserve from issuing a central bank digital currency (CBDC), by incorporating the Anti-CBDC Surveillance State Act into the broader Digital Asset Market Clarity Act. Both bills passed the House in July, and the House Rules Committee is now considering merging the bills before sending a final version to the Senate. This approach mirrors earlier efforts by House Republicans to include a CBDC ban in the previously passed GENIUS Act. Meanwhile, Senate Republicans have introduced their own market structure framework, which builds on the CLARITY Act but does not currently include a CBDC ban. The draft agenda can be read here.
Coinbase Pushes DOJ to Seek Preemption in Crypto Market Legislation
On Sept. 15, Coinbase Global Inc. (Coinbase) submitted a letter to the U.S. Department of Justice (DOJ) urging it to publicly support federal preemption in digital asset legislation currently under consideration by Congress. Specifically, Coinbase requested that the DOJ endorse provisions that would preempt state securities laws and money transmission licensing requirements for firms subject to federal oversight. The letter emphasized that preemption should apply retroactively to shield market participants from pending or prior state-level actions that would be invalidated under a federal regime. Coinbase highlighted recent enforcement actions by state securities regulators in California, New Jersey, Oregon, Maryland, New York, and Wisconsin as examples of regulatory fragmentation. Coinbase further argued these actions often target staking, custody, and secondary market activity, creating legal uncertainty and discouraging innovation, ultimately encouraging the DOJ to promote clear, consistent rules in its feedback to Congress. Coinbase’s letter can be read here.
