Welcome to the primary situation of the Digital Assets + Blockchain Newsletter. On this publication, we’ll observe the regulatory, legislative, and enforcement developments reshaping the crypto and digital belongings panorama — from the GENIUS Act’s stablecoin framework to the SEC’s and CFTC’s evolving posture on digital commodities to custody guidelines, licensing regimes, and past.
In This Challenge:
• In the Spotlight
• Federal Developments
• State Developments
• Additional Updates
Within the Highlight
Within the Wake of CLARITY Act’s Failure, Companies Transfer Ahead With out Congressional Motion or Certainty
After the Senate blocked the CLARITY Act, Troutman Pepper Locke’s Genna Garver and David Madrazo look at how the U.S. Securities and Change Fee (SEC) and Commodity Futures Buying and selling Fee (CFTC) are shifting to fill the regulatory hole on their very own, from the SEC’s proposed Regulation Crypto Assets to up to date CFTC steerage on tokenized investments, and the place company motion reaches its limits, notably on chapter protections for digital asset prospects. Click on here to learn the complete article.
Troutman Pepper Locke to Attend The Bridge Convention in New York
Members of Troutman Pepper Locke’s Digital Assets and Blockchain crew, Akshay Belani, Genna Garver, Deb Kovosky, and Ethan Ostroff, will attend The Bridge, an invite-solely institutional crypto convention in New York on October 27. Organized by The Tie, the occasion gathers 600+ establishments and 1,100+ attendees for top-stage panels and personal conferences on tokenization, DeFi, and digital asset markets.
Federal Developments
September 25, SEC Corp Fin Employees Points FAQs on Crypto Asset Classification and Funding Contract Evaluation Underneath March 2026 Interpretive Launch
The SEC’s Division of Company Finance issued workers-stage FAQs decoding the Fee’s March 17, 2026 Interpretive Launch on the applying of federal securities legal guidelines to crypto belongings, expressly noting the FAQs are workers views solely, carry no authorized power, and don’t bind the Fee. The steerage addresses two teams of questions: classification points beneath Part III of the Interpretive Launch, together with that an issuer’s personal said definitions of “performance” and “decentralization” (not the Launch’s common definitions) govern whether or not the issuer has fulfilled its representations, that Staking Receipt Tokens could also be categorized as both a “digital software” or a “digital commodity” relying on whether or not they’re issued by a protocol-based mostly Liquid Staking Supplier, and {that a} “receipt” is distinguished from different devices by the issuer’s incapacity to switch, lend, pledge, rehypothecate, or in any other case use the deposited asset; and funding-contract points beneath Part IV, together with when advertising and marketing communications represent representations of “important managerial efforts,” affirmation {that a} non-safety crypto asset doesn’t separate from its related funding contract merely as a result of a 3rd social gathering assumes the issuer’s promised efforts, that providers to safe, keep, or enhance an already-practical crypto system don’t represent important managerial efforts, that statements by an issuer of a practical, centerless crypto system typically can not create a brand new funding contract, and that buyback program bulletins aren’t representations of managerial efforts the place the system is practical and has no central social gathering however could also be the place the system just isn’t but practical and the buyback is framed as producing yield. For extra info, click on here.
September 24, FRB Proposes Two Guidelines Implementing GENIUS Act Stablecoin Framework for State Member Banks
The Federal Reserve Board (FRB) requested public touch upon two proposed guidelines governing cost stablecoin issuance beneath the GENIUS Act. The primary units the continued substantive framework for FRB-supervised permitted cost stablecoin issuers (PPSIs) and associated custodians, overlaying permissible actions, one-to-one reserve backing in money, brief-time period Treasuries, and different permissible belongings, two-enterprise-day redemption and charge disclosure necessities, month-to-month audited reserve reporting with CEO/CFO certifications, standardized capital necessities, and a cross-slicing anti-tying prohibition that reaches all PPSIs no matter regulator. The second establishes a tailor-made utility course of for insured state member banks looking for to situation stablecoins by means of a subsidiary, together with a 30-day completeness evaluate, a 120-day resolution deadline (with deemed approval if missed), security-and-soundness-based mostly denial requirements, and an appeals course of. The proposals are carefully coordinated with parallel Workplace of the Comptroller of the Foreign money (OCC) and Federal Deposit Insurance coverage Company (FDIC) rulemakings, and feedback on each are due 60 days after Federal Register publication. For extra info, click on here.
September 24, CFTC Employees Updates FAQs on Registrant Use of Tokenized Collateral and Blockchain Recordkeeping
The CFTC’s Market Individuals Division, Division of Market Oversight, and Division of Clearing and Danger (Launch Quantity 9303-26) launched updates to their FAQs Regarding Registrant and Registered Entity Actions Referring to Crypto Assets and Blockchain Applied sciences, addressing two new subjects: funding of buyer funds in tokenized types of permitted investments, and using blockchain know-how to fulfill registrants’ recordkeeping necessities. Chairman Michael S. Selig mentioned the replace displays the company’s “ongoing efforts to offer regulatory readability for the crypto trade.” The FAQs, first issued March 20, 2026, construct on and supply additional readability concerning CFTC Employees Letter 25-39 (Tokenized Collateral Steering) and CFTC Employees Letter 26-05 (the workers no-motion place on digital belongings accepted as margin collateral). For extra info, click on here.
September 21, SEC Grants ARK Enterprise Fund Reduction for a Tokenized Share Class
In Funding Firm Act Launch No. 36333 (File No. 812-16031), the Fee granted ARK Enterprise Fund and ARK Funding Administration exemptions from §§ 18(a)(2), 18(c), and 18(i), Rule 23c-3, and Part 17(d) and Rule 17d-1 so the closed-finish interval fund can supply two new courses alongside its current shares: an Change Class listed on a nationwide securities alternate and a Tokenized Class traded on different buying and selling methods or different citation mediums. The reduction is topic to the situations within the utility. ARK has not introduced a launch. It’s the first 1940 Act exemptive order constructed round a tokenized class, and it lands three weeks after the SEC’s switch-agent proposal and 4 days after the Innovation Exemption. For extra info, click on here.
September 18, OCC Grants Conditional Belief Charters to Bastion, Catena, and Agora
The OCC granted conditional nationwide belief charters to fintechs Bastion Platforms, Catena Belief Financial institution, and Agora Nationwide Belief Financial institution, every looking for to broaden stablecoin and crypto choices. Bastion converts its current New York belief firm right into a nationwide belief firm and can pursue white-label stablecoin issuance, fiduciary pockets providers, and issuer providers; Catena, a brand new entity and subsidiary of AI-agent banking platform Catena Labs, will supply custody, funding administration, conversion, and clearing/execution throughout fiat, securities, stablecoins and crypto; and Agora, issuer of the AUSD token, will give attention to stablecoin issuance, reserve upkeep, and institutional custody providers. All three should restrict actions to belief-firm enterprise and safe Federal Reserve financial institution inventory earlier than full approval. The Financial institution Coverage Institute and Unbiased Group Bankers of America objected to Catena’s and Agora’s purposes as insufficiently detailed and doubtlessly exceeding belief-firm actions (together with attainable unregistered brokerage for Catena), however the OCC discovered each companies adopted established procedures and that commenters had enough alternative to reply. The approvals proceed the OCC’s expansive posture towards crypto belief charters (following Constancy Digital Assets, Coinbase, Ripple, and World Liberty Monetary) even because it has denied others (Bunq, Sensible US) and mirror the constitution’s rising attraction beneath the GENIUS Act, which named the OCC as main regulator of stablecoin issuers. For extra info, click on here, here, and here.
September 17, SEC Points 5-Yr “Innovation Exemption” for Onchain Buying and selling of Tokenized NMS Shares
The Fee granted non permanent conditional reduction beneath Change Act § 36(a)(1) that lets “tokenized securities venues” commerce tokenized Nationwide Market System (NMS) shares by means of permissioned automated market makers and liquidity swimming pools with out registering as exchanges. Liquidity suppliers that fund these swimming pools with their very own capital are exempt from the “supplier” definition. Situations embrace limits on the variety of symbols and on quantity, tokens that carry the identical rights because the underlying inventory, discover to the issuer earlier than a venue lists a 3rd-social gathering tokenized model of its shares, auditable sensible contracts on a public permissionless ledger, halts that observe the first itemizing alternate, and public disclosure of operations and buying and selling exercise. The reduction runs 5 years from publication, and the order asks for public remark. The issuer-discover situation follows AMC’s September 3 objection to tokens referencing its shares with out consent. For extra info, click on here.
September 17, CFTC Sends Crypto Market Rulemaking to White Home Evaluate Two Days After the CLARITY Vote
The Workplace of Info and Regulatory Affairs (OIRA) obtained a CFTC rulemaking titled “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets” (RIN 3038-AF80) on Sept 17. It’s listed on the prerule stage and isn’t designated economically vital. The CFTC declined to touch upon the contents. Chairman Michael S. Selig mentioned in August that the company would write a crypto market construction beneath its current authority, and that is the primary formal step. With the SEC’s Regulation Crypto Assets proposal already out, each businesses now have market construction rulemakings shifting. For extra info, click on here.
September 17, CFTC Employees Extends Phantom No-Motion Reduction to All Passive Software program Suppliers
In Employees Letter 26-25, the Market Individuals Division mentioned it is not going to advocate enforcement in opposition to suppliers of passive software program for failing to register as introducing brokers or related individuals. The software program should route customers on to registered Futures Fee Retailers (FCMs), Introducing Brokers (IBs), Designated Contract Markets (DCMs), and the letter covers occasion contracts, perpetual contracts, and different CFTC-regulated derivatives. It extends the March 17 place given to Phantom (Employees Letter 26-09) to equally located suppliers. A supplier can not maintain or management consumer belongings, generate purchase or promote indicators, or train discretion over order routing. It should undertake compliance insurance policies as if registered as an IB and signal undertakings accepting joint legal responsibility with the registrant. Income sharing and transaction-based mostly charges are allowed. The place lasts till the Fee addresses IB registration for software program builders by rule or steerage. For extra info, click on here.
September 17, SEC Employees Clears Zero-Money Brokerage Accounts With Buyer Cash Held at Banks or Cash Transmitters
A no-motion letter to eToro USA Securities lets an introducing dealer function on the $5,000 minimal web capital stage beneath Rule 15c3-1 whereas buyer money sits in exterior accounts at a financial institution or a FinCEN-registered, state-licensed cash providers enterprise (MSB) as an alternative of within the brokerage account. Situations embrace disclosure that these funds aren’t Securities Investor Safety Act protected, no commingling with the MSB’s personal funds, and periodic checks of the MSB’s licenses. For extra info, click on here.
State Developments
September 27, Governor Newsom Indicators California Laws Barring Public Officers from Issuing Meme Cash, Focusing on Crypto Fraud and Cash Laundering
Governor Gavin Newsom signed a package deal of shopper-safety and anti-corruption payments, most notably Meeting Invoice 2409, which prohibits California public officers from issuing meme cash and bars firms from itemizing any meme coin utilizing a public official’s likeness or picture, framed explicitly by the governor’s workplace as a response to President Trump’s meme coin. The package deal additionally contains Senate Invoice 1208, which addresses cash laundering involving digital belongings and establishes a authorized course of for seizing crypto belongings from transnational prison networks, together with restitution pointers for victims of crypto scams and fraud. The signings construct on prior California measures requiring officers to reveal cryptocurrency holdings. For extra info, click on here.
September 25, Sixth Circuit Splits from Third Circuit, Sides With Ninth: Kalshi’s Sports activities-Occasion Contracts Are Not “Swaps,” State Playing Legal guidelines Not Preempted
In consolidated appeals from Ohio and Tennessee, the U.S. Court docket of Appeals for the Sixth Circuit held that KalshiEX LLC’s sports activities-occasion contracts don’t qualify as “swaps” beneath the Commodity Change Act (CEA) and due to this fact fall outdoors the CFTC’s “unique jurisdiction,” rejecting Kalshi’s argument that state sports activities-playing legal guidelines are preempted as utilized to its platform. The court docket reasoned {that a} qualifying occasion have to be “inherently related to a possible monetary, financial, or industrial consequence,” a normal Kalshi’s sports activities contracts (spanning outcomes like nook-kick counts or broadcaster phrase decisions) don’t meet, and individually held that even when the contracts had been swaps, the CEA neither expressly nor impliedly preempts Ohio’s or Tennessee’s playing legal guidelines, because the unique-jurisdiction provision reaches solely direct regulation of designated contract markets and never states’ incidental, traditionally rooted authority over intrastate playing. The court docket affirmed the Southern District of Ohio’s denial of a preliminary injunction, vacated the Center District of Tennessee’s grant of 1, and remanded each circumstances, deepening a circuit break up. For extra info, click on here.
September 24, New York Sues Polymarket US as an Unlicensed Playing Operation, Its Fourth Prediction-Market Swimsuit
Lawyer Common James and Governor Hochul filed a verified petition beneath Govt Legislation 63(12) in Supreme Court docket, New York County in opposition to QCX LLC d/b/a Polymarket US. The state alleges the platform provides bets on sporting occasions and different outcomes with no Gaming Fee license, evades state gaming taxes, and admits customers aged 18 to twenty in violation of the 21-and-over rule for cellular sports activities betting. It seeks an injunction, disgorgement, restitution, and penalties of 3 times the corporate’s positive aspects. The petition follows the state’s July go well with in opposition to Kalshi and April fits in opposition to Coinbase and Gemini, and it lands one week after Missouri’s stop and desist letters to 6 platforms, together with Polymarket. Hours later, QCX LLC filed its personal go well with, QCX LLC v. James, No. 1:26-cv-08345 (S.D.N.Y.), in opposition to 9 defendants together with the Lawyer Common and the Gaming Fee, looking for declaratory reduction and preliminary and everlasting injunctions on the speculation that the CEA offers the CFTC unique jurisdiction over its designated contract market. Notably, the Sixth Circuit’s ruling in KalshiEX LLC v. Schuler (mentioned above) rejected this similar preemption argument the very subsequent day, which can bear on Polymarket’s prospects within the S.D.N.Y. motion. For extra info, click on here and here.
September 22, Wyoming Blockchain Committee Posts Invoice Drafts for Its September 28-29 Assembly: Digital Asset Authority, Secure Token State Funds, Kiosk Penalties
The Choose Committee on Blockchain, Monetary Know-how and Digital Innovation Know-how launched its agenda for the Laramie assembly. Drafts up for dialogue embrace 27LSO-0010, a “Wyoming Digital Asset Authority” that might restructure the Secure Token Fee; 27LSO-0136 on paying and receiving state funds in steady tokens; 27LSO-0137, the Mannequin Cash Transmission Modernization Act, from the Division of Banking; and 27LSO-0138, civil penalties for digital forex kiosks. The Secure Token Fee and its FRNT working group will even report. The committee meets once more November 19-20 in Cheyenne, so these are the drafts headed for the 2027 session. For extra info, click on here.
September 14, 18 Attorneys Common Oppose CLARITY Act Preemption of State Securities Enforcement
New York Lawyer Common James and a bipartisan group of 17 different attorneys common, together with California, Connecticut, Delaware, Illinois, Massachusetts, New Jersey, and Ohio, wrote to Senators Tim Scott and Elizabeth Warren the day earlier than the cloture vote. They object that the invoice would let the SEC preempt state registration regimes, give the SEC unilateral discretion to reset the scope of federal preemption, and weaken state anti-fraud enforcement in opposition to crypto scams. They ask Congress to protect and codify the states’ enforcement and registration roles. The invoice failed the subsequent day, however the letter units the states’ place for any rewritten textual content. For extra info, click on here.
Further Updates
September 28, ECB Launches Name for Expressions of Curiosity in New Wave of Digital Euro Innovation Platform Actions
As a part of preparations for a possible digital euro, the Eurosystem (the European Central Financial institution and euro-space nationwide central banks) is inviting non-public firms and organizations, together with retailers, cost service suppliers, fintechs, shopper associations, public establishments, and analysis institutes, to collaborate on exploring how the digital euro can foster market innovation, constructing on the digital euro innovation platform launched in 2024. The initiative has two workstreams: an experimentation workstream, operating January–June 2027, during which chosen individuals will develop and check options constructed on the digital euro’s core infrastructure, with a proof of idea and end result report anticipated; and an exploration workstream for broader thought improvement. For extra info, click on here.
September 23, NYSE and Blockchain.com Signal MOU on 24/7 Tokenized Shares; MoonPay Buys a Dealer-Supplier, ATS, and Switch Agent
Two offers in in the future present the market constructing on final week’s Innovation Exemption. Blockchain.com and NYSE signed a non-binding MOU to provide Blockchain.com’s 44 million accounts entry to tokenized U.S. equities and ETFs by means of NYSE’s digital different buying and selling system (ATS), across the clock, topic to regulatory approvals. Individually, MoonPay agreed to amass North Capital Funding Know-how, which owns two SEC-registered dealer-sellers, the PPEX ATS, a registered switch agent, and a registered funding adviser. Crypto-native companies at the moment are shopping for the securities licenses fairly than ready for a brand new constitution. For extra info, click on here and here.
September 21, Circle Launches Digital Asset-Backed Borrowing in Circle Mint
Circle introduced that Digital Asset-Backed Borrowing (DABB) is now accessible to eligible Circle Mint LLC institutional prospects, permitting them to deposit BTC, mint Circle Wrapped Bitcoin (cirBTC), and borrow USDC by means of supported third-social gathering lending markets on Arc or Ethereum, all inside a single coordinated workflow. Borrowed USDC is delivered straight into the client’s Circle Mint steadiness, letting establishments entry greenback liquidity with out promoting the bitcoin backing the place. The lending positions stay overcollateralized, with rates of interest, collateral limits, and liquidation thresholds set by the chosen third-social gathering market (Morpho at launch, with Aave and others anticipated to observe) fairly than by Circle. The service is restricted to qualifying institutional shoppers and excludes prospects in New York. For extra info, click on here.
September 17, WisdomTree and MoonPay Plan Retail Entry to a Tokenized Cash Market Fund That Will Additionally Again Stablecoin Reserves
WisdomTree and MoonPay introduced a deliberate integration that might supply the WisdomTree Treasury Cash Market Digital Fund (WTGXX) to U.S. buyers by means of MoonPay, which experiences greater than 35 million accounts and 1,700 companions. MoonPay additionally intends to make use of WTGXX in its stablecoin reserve administration. No launch date was given. The fund is distributed by a Monetary Trade Regulatory Authority-member dealer-supplier, and WisdomTree’s digital associates embrace a registered cash providers enterprise and a New York Division of Monetary Companies-chartered belief firm, so the product reaches crypto-native customers by means of current licenses. For extra info, click on here.
Closing Takeaways
This inaugural situation of the Digital Assets Newsletter captures a defining theme of the present second: with the CLARITY Act successfully lifeless for the present congressional session, federal businesses, state regulators, and the courts are every shifting to fill the ensuing hole on their very own timeline, usually in ways in which overlap or battle. The SEC and CFTC are advancing parallel market-construction rulemakings beneath current authority; the Federal Reserve, OCC, and FDIC are individually constructing out the GENIUS Act’s stablecoin framework; and the courts, most notably final week’s Sixth Circuit resolution, at the moment are actively splitting on the core jurisdictional query of whether or not prediction-market and occasion contracts fall beneath federal or state management.
We’ll proceed monitoring these developments and publish our subsequent situation on October 15. As all the time, you probably have questions on how any of those developments have an effect on your corporation, please attain out to a member of our Digital Assets + Blockchain team.
The Digital Assets + Blockchain Newsletter is a publication from Troutman Pepper Locke’s Consumer Financial Services practice.
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