Regulatory update: White House digital asset report, SEC on 'Project Crypto' and liquid staking, and more

Editor’s note: Our Regulatory Updates series highlights the latest regulatory, legal, and policy happenings relevant to the crypto industry, curated by the a16z crypto regulatory team.

Regulatory news: July 22 – August 5, 2025

🧠 tl;dr

• The President’s Working Group on Digital Asset Markets released a report that provides a broad range of regulatory and legislative recommendations for U.S. crypto policy. Treasury Secretary Scott Bessent, SEC Chair Paul S. Atkins, and others released statements in connection with the report.
• A federal jury convicted Tornado Cash cofounder Roman Storm of conspiring to operate an unlicensed money transmitting business, but deadlocked on conspiracy charges relating to money laundering and sanctions.
• The Court of Appeals for the Second Circuit overturned the fraud and money laundering convictions of a former OpenSea product manager accused of insider trading.
• SEC Chair Paul S. Atkins announced the launch of a Commission-wide initiative called “Project Crypto” to modernize the securities rules and regulations to enable America’s financial markets to move onchain. 
• The SEC’s Division of Corporation Finance issued a statement providing its view that “Liquid Staking Activities” (as defined in the statement) in connection with protocol staking do not involve the offer and sale of securities under the Securities Act or the Securities Exchange Act. The Division also said that the offer and sale of Staking Receipt Tokens (in the manner described in the statement) do not involve the offer and sale of securities, unless the deposited covered crypto assets are part of or subject to an investment contract. Commissioners Hester M. Peirce and Caroline A. Crenshaw issued statements in connection with the Division’s release. 

🌽 Commodity Futures Trading Commission

• The CFTC announced that it will kick off a “crypto sprint” to start implementation of the recommendations in the President’s Working Group on Digital Asset Markets report. The CFTC will launch an initiative for trading spot crypto asset contracts that are listed on a CFTC-registered futures exchange as the first initiative in the sprint.

🦅 Congress

• Senators Tim Scott (R-S.C.), Cynthia Lummis (R-Wyo.), Bill Hagerty (R-Tenn.), and Bernie Moreno (R-Ohio) released an initial discussion draft of digital asset market structure legislation covering issues under the Banking Committee’s jurisdiction.
• House Majority Whip Tom Emmer (R-Minn.) and Representative Nick Begich (R-Alaska) called the GENIUS Act a “major win for American leadership in digital finance,” but said that it was not enough “on its own” and encouraged the Senate to pass the CLARITY Act.
• Senator Cynthia Lummis (R-Wyo.) introduced the 21st Century Mortgage Act, which would require government-sponsored enterprises to consider digital assets when assessing single-family mortgage eligibility.
• Senators Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), and Ron Wyden (D-Ore.) sent a letter to Comptroller of the Currency Jonathan Gould requesting information on the steps he would take to “ensure that President Trump’s financial conflicts of interest do not influence the [OCC’s] efforts to ensure the safety and soundness of our banking system.”

⚖️ Department of Justice

• As mentioned in “tl;dr,” a federal jury convicted Tornado Cash cofounder Roman Storm of conspiring to operate an unlicensed money transmitting business, but deadlocked on conspiracy charges relating to money laundering and sanctions.
• As mentioned in “tl;dr,” the Court of Appeals for the Second Circuit overturned the fraud and money laundering convictions of a former OpenSea product manager accused of insider trading.
• Two Samourai Wallet executives each pleaded guilty to one count of conspiracy to operate an unlicensed money transmitting business. Their sentencing dates are scheduled for November. 
• A Connecticut man pleaded guilty to charges related to his operation of an unlicensed money transmitting business and exchange of more than $1 million for cryptocurrency on behalf of customers throughout the United States.
• A federal judge sentenced the founder and CEO of a company that developed cryptocurrency “AML Bitcoin” to seven years in federal prison for wire fraud and money laundering.
• The DOJ filed a civil forfeiture action against approximately $2 million in digital currency connected with Buy Cash Money and Money Transfer Company (BuyCash), a Gaza-based money transfer business that was involved in financially supporting Hamas and its agents and collaborators.
• The DOJ filed a civil action seeking the forfeiture of cryptocurrency valued at approximately $7.1 million seized in the investigation of an oil and gas-related investment fraud scheme. 

💰 Department of the Treasury

• The Financial Crimes Enforcement Network issued a notice urging financial institutions to be vigilant in identifying and reporting suspicious activity involving convertible virtual currency (CVC) kiosks.
• The Financial Crimes Enforcement Network brought together Treasury components, law enforcement agencies, financial institutions, regulatory technology companies, and trade groups to share insights on driving innovation in the digital assets ecosystem while protecting consumers from emerging fraud and scam threats.
• Treasury Secretary Scott Bessent wrote about making America a “crypto superpower” in the Washington Post.

💵 Financial Industry Regulatory Authority

• The Financial Industry Regulatory Authority censured and fined TradeStation Securities Inc. $85,000 for distributing retail communications which failed to clearly disclose that crypto assets were not offered through a registered broker-dealer or which did not provide a fair and balanced presentation of the benefits and risks of the products discussed.

📈 Securities and Exchange Commission

• As mentioned in “tl;dr,” SEC Chair Paul S. Atkins announced the launch of a Commission-wide initiative called “Project Crypto” to modernize the securities rules and regulations to enable America’s financial markets to move onchain. 
• As mentioned in “tl;dr,” the SEC’s Division of Corporation Finance issued a statement providing its view that “Liquid Staking Activities” (as defined in the statement) in connection with protocol staking do not involve the offer and sale of securities under the Securities Act or the Securities Exchange Act. The Division also said that the offer and sale of Staking Receipt Tokens (in the manner described in the statement) do not involve the offer and sale of securities, unless the deposited covered crypto assets are part of or subject to an investment contract. Commissioners Hester M. Peirce and Caroline A. Crenshaw issued statements in connection with the Division’s release.
• The SEC voted to approve orders to permit in-kind creations and redemptions by authorized participants for crypto asset exchange-traded product shares. Commissioner Mark T. Uyeda issued a statement in connection with the approval.
• The SEC filed a Joint Stipulation of Dismissal entered into with Ripple Labs, Inc., Bradley Garlinghouse, and Christian A. Larsen that dismisses the agency’s appeal and defendants’ cross-appeal pending in the Court of Appeals for the Second Circuit, and resolves the SEC’s civil enforcement action against the defendants.
• The SEC announced that its Crypto Task Force will host a series of roundtables across the country to provide opportunities for additional stakeholders to meet with Commissioner Hester M. Peirce, who leads the Crypto Task Force.
• The founder of lending firm MyConstant agreed to pay more than $10 million to the SEC to settle charges relating to misappropriating investor funds through transfers outside the United States for his personal use and misusing investor funds to purchase at least $11.9 million of crypto asset TerraUSD.
• SEC Commissioner Hester M. Peirce discussed financial privacy and blockchains at the Science of Blockchain Conference.
• The SEC delayed making a decision on whether to approve the Truth Social Bitcoin ETF, as well as the Grayscale Solana Trust and the Canary Capital Litecoin ETF proposals.

🏛️ White House

• As mentioned in “tl;dr,” the President’s Working Group on Digital Asset Markets released a report that provides a broad range of regulatory and legislative recommendations for U.S. crypto policy. Treasury Secretary Scott Bessent, SEC Chair Paul S. Atkins, and others released statements in connection with the report.
• President Donald Trump signed an Executive Order directing federal agencies to combat politicized or unlawful “debanking” activities and to conduct a review to identify financial institutions that may have engaged in such activities.
• President Donald Trump signed an Executive Order that includes a series of directives that would provide a path for allowing 401(k) investors to access alternative assets, including digital assets.
• Bo Hines, the Executive Director of the President’s Council of Advisors for Digital Assets at the White House, announced that he would be leaving his current position to return to the private sector.

🌍 State

⛰️ Colorado

• A Denver grand jury indicted a pastor and his wife who created and marketed a cryptocurrency called INDXcoin and allegedly used their faith-based connections to recruit and solicit nearly $3.4 million from investors. The indictment alleges that the couple only directed a small amount of the proceeds to the business venture and instead spent at least $1.3 million on personal expenditures.

🗽 New York

• The New York State Department of Financial Services announced that Paxos Trust Company will pay a $26.5 million penalty to New York State for failure to conduct sufficient due diligence of its former partner, Binance, and systemic failures in Paxos’s anti-money laundering program.

🌍 International

🇪🇺 European Union

• The European Banking Authority released an opinion on money laundering and terrorist financing risks affecting the EU’s financial sector, stating, in part, that “the abuse of crypto asset services for financial crime purposes remains a key area of concern.” 
• European Central Bank Adviser Jürgen Schaaf wrote that “the ECB’s control over monetary conditions could be weakened” if U.S. dollar stablecoins “become widely used in the euro area.”
• European Central Bank Executive Board member Piero Cipollone wrote that a digital euro “will not replace banknotes and coins but rather complement them,” and that with a digital euro alongside cash, “Europeans will benefit from a broader range of payment methods.”
• CoinShares (CS), a crypto asset manager, announced that its French subsidiary had received a license under the European Union’s Markets in Crypto Assets regulation from France’s Autorité des Marchés Financiers.

🇭🇰 Hong Kong

• Hong Kong Monetary Authority CEO Eddie Yue warned of excessive hype in the stablecoin space and expressed concern about how to prevent stablecoins from “being used as a tool for money laundering.”
• The Hong Kong Monetary Authority published various documents relating to the implementation of its regulatory regime for stablecoin issuers.

📈 Organisation for Economic Co-operation and Development

• The Organisation for Economic Co-operation and Development updated its Frequently Asked Questions relating to the application of the Crypto-Asset Reporting Framework. One of the updated FAQs states that: “in the context of DeFi arrangements, an implementing jurisdiction may defer its application of the control and sufficient influence test, until further interpretative guidance is issued to clarify the application of the Crypto-Asset Reporting Framework in this respect.”

🇵🇭 Philippines

• The Philippines Securities and Exchange Commission issued a warning to the public against engaging with unregistered entities and online platforms that offer crypto-asset services to Philippine residents without required registrations or authorizations.

🇬🇧 United Kingdom

• The UK’s Financial Conduct Authority lifted its ban on retail access to cryptocurrency exchange-traded notes (cETNs).

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