Crypto Brief

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.

Treasury Seeks Public Input on Stablecoin Regulation Under GENIUS Act

On Sept. 18, the U.S. Department of the Treasury (Treasury) released an advance notice of proposed rulemaking (Notice) inviting public comment on its upcoming regulations under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). The GENIUS Act directs the Treasury to develop rules that support innovation in payment stablecoins while ensuring consumer protection, financial stability, and safeguards against illicit finance. The Notice seeks input from a broad range of stakeholders to support the Treasury’s rulemaking process. This builds on a previous request for comment on detecting illicit activity in digital assets, open until Oct. 17. Comments on the Notice must be submitted within 30 days of its publication in the Federal Register. See the Treasury’s press release here.

ShapeShift Settles $750K Sanctions Case With OFAC Over Crypto Transactions in Embargoed Jurisdictions

On Sept. 22, ShapeShift AG, a now-defunct Swiss company that operated a U.S. digital asset exchange, agreed to pay $750,000 to the U.S. Treasury’s Office of Foreign Assets Control (OFAC) to settle alleged violations of multiple U.S. sanctions programs. Between 2016 and 2018, ShapeShift processed over $12.5 million in crypto transactions with users in sanctioned countries, including Cuba, Iran, Sudan, and Syria, without implementing a sanctions compliance program. The platform failed to screen users based on available IP data and only adopted compliance controls after receiving an OFAC subpoena. While OFAC cited ShapeShift’s lack of due diligence and harm to sanctions integrity as aggravating factors, mitigating factors included its small size, its cooperation with the investigation, and its closure in 2021. The case underscores the growing enforcement focus on digital asset companies and the necessity for risk-based sanctions compliance, even for internationally incorporated firms operating primarily from the U.S. The OFAC enforcement release may be viewed here.

CFTC Appoints New Co-chair for Digital Asset Markets Subcommittee

On Sept. 19, the Commodity Futures Trading Commission (CFTC) announced Scott Lucas, Managing Director and Head of Markets Digital Assets at J.P. Morgan, as the new co-chair of the Global Markets Advisory Committee’s (GMAC) Digital Asset Markets Subcommittee. He joins existing co-chair Sandy Kaul, Executive Vice President and Head of Innovation at Franklin Templeton. In the CFTC’s press release, acting Chair Caroline D. Pham highlighted the subcommittee’s role in advancing regulatory clarity for digital assets, including the development of the first U.S. digital asset taxonomy and tokenized collateral recommendations. The appointments aim to further the CFTC’s efforts in shaping effective digital asset policy amid evolving market structures. The CFTC’s press release may be viewed here.

U.S. and UK Launch Joint Task Force on Capital Markets and Digital Assets

On Sept. 22, the U.S. and UK announced the formation of the Transatlantic Taskforce for Markets of the Future to enhance cooperation on capital markets and digital assets. Led by officials from both countries’ treasuries and regulatory bodies, the task force will focus on harmonizing oversight of digital assets and exploring innovations in wholesale digital markets. The group will deliver recommendations within 180 days through the UK-U.S. Financial Regulatory Working Group, with input from private industry. While the initiative covers traditional markets, digital assets are expected to be a central focus, with short-term goals like enabling cross-border use and long-term strategies for infrastructure development. The effort is seen as a step toward aligning global standards and reinforcing both countries’ positions as financial innovation leaders. The Treasury’s press release may be viewed here.

CFTC Seeks Feedback on Crypto Collateral

On Sept. 23, the CFTC issued a request for public comment on a proposed initiative that would allow derivatives clearing organizations (DCOs) to use digital assets, including stablecoins, as collateral for margin requirements. The initiative, led by Chair Pham, aims to modernize collateral practices and improve capital efficiency in regulated markets. It builds on recommendations from the President’s Working Group on Financial Markets and aligns with the GENIUS Act. The CFTC is particularly focused on tokenized real-world assets (RWAs) and stablecoins such as USDC and Tether, treating them as similar to cash and U.S. securities. The agency is seeking feedback on potential pilot programs, risk management standards, and the role of third-party custodians. Public comments are open through Oct. 20. The press release can be read here.

U.S. Lawmakers Urge SEC To Act on Crypto Retirement Plan EO

On Sept. 22, nine U.S. lawmakers, including House Financial Services Committee Chairman French Hill and Capital Markets Subcommittee Chair Ann Wagner, sent a letter to Securities and Exchange Commission (SEC) Chair Paul Atkins urging him to take prompt action in support of President Donald Trump’s August executive order (EO). The order directs federal agencies to revise regulations that limit access to alternative assets such as cryptocurrency in 401(k) retirement plans. In their letter, lawmakers stressed that more than 90 million Americans are currently unable to invest in these asset classes through their retirement accounts. This coordinated push underscores growing congressional support for expanding retirement investment options to include emerging asset classes like cryptocurrency. The letter can be read here.