Client Alert: Navigating Remaining Risks in the New Crypto and Digital Assets Environment

Client Alert: Navigating Remaining Risks in the New Crypto and Digital Assets Environment

  • 25.03.2025 20:37
  • jdsupra.com
  • Keywords: Regulatory Risk, Legal Risks

Despite a friendlier regulatory environment under Trump's SEC, crypto companies face ongoing risks from private lawsuits, state enforcement actions, global regulations like MiCA, and continued SEC focus on fraud and market manipulation.

Coinbase NewsCOINsentiment_dissatisfied
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Estimated market influence

Coinbase

Coinbase

Negativesentiment_dissatisfied
Analyst rating: Buy

The SEC dismissed a case against Coinbase.

Kraken

Negativesentiment_dissatisfied
Analyst rating: N/A

The SEC dismissed a case against Kraken.

Context

Analysis of Crypto Market Risks and Regulatory Implications

Key Developments in Regulatory Environment

  • SEC's Shift in Enforcement: The SEC under Trump has formed a Crypto Task Force, dismissed enforcement actions, and rescinded SAB 121. This includes:
    • Voluntary dismissal of cases against Coinbase (February 21, 2025) and Kraken (March 3, 2025).
    • Adoption of an executive order to support digital asset growth.

Remaining Regulatory Risks

Private Litigation and State Actions

  • Private Suits: Plaintiffs are pursuing cases against crypto companies for securities violations. Notable examples include:
    • Lawsuit against memecoin generator Pump.fun in January 2025, alleging tokens as unregistered securities.
    • Pending in the Southern District of New York.

State-Level Enforcement

  • State Actions: Increased activity from state attorneys general, such as:
    • New York Attorney General Letitia James suing crypto mining company AWS Mining Pty Ltd. for alleged pyramid schemes causing $1 billion losses (June 2024).
    • California Attorney General Rob Bonta targeting prominent crypto platforms under the California Commodities Law.

Global Regulatory Landscape

  • EU and International Regulation: Implementation of MiCA framework in the EU, with countries like France transitioning to it. Other nations, including , , , and , are actively regulating crypto assets.

Ongoing SEC Risks

  • Fraud Enforcement: The Cyber and Emerging Technologies Unit (CETU) prioritizes fraud involving blockchain and crypto assets.
  • Market Manipulation: DOJ and CFTC continue enforcement against market manipulation, such as self-trading schemes (October 2024).

Strategic Recommendations for Companies

  • Compliance Focus:
    • Ensure all public statements are vetted and supported.
    • Maintain compliance with anti-money laundering obligations.
  • Adaptation to Regulatory Landscape: Keep pace with evolving federal and state regulations, despite easing enforcement.

Long-Term Implications

  • The crypto industry faces a complex regulatory environment, requiring businesses to balance growth with compliance. While federal enforcement may decrease, risks persist at the state, private, and international levels.