Blockchain and Digital Assets News and Trends – May 2025
This periodic bulletin is designed to help companies identify important legal developments governing the use and acceptance of blockchain technology, smart contracts, and digital assets.
While the use cases for blockchain technology are vast, this bulletin focuses on uses of blockchain and smart contracts in the financial services sector. With respect to digital assets, we have organized our approach to this topic by discussing them in terms of traditional asset type or function (although the types and functions may overlap) – that is, digital assets as:
- Securities
- Virtual currencies
- Commodities
- Deposits, accounts, intangibles
- Negotiable instruments
- Electronic chattel paper
- Digitized assets
In addition to reporting on the law and regulation governing blockchain, smart contracts, and digital assets, this bulletin will discuss the legal developments supporting the infrastructure and ecosystems that enable the use and acceptance of these new technologies.
STATUTORY AND AGENCY DEVELOPMENTS
FEDERAL DEVELOPMENTS
OCC
OCC clarifies bank authority for crypto custody and services. On May 7, the Office of the Comptroller of the Currency (OCC) issued Interpretive Letter 1184, providing guidance on the authority of national banks and federal savings associations to engage in cryptoasset custody and execution services. This clarification reaffirms and expands upon previous applicable OCC guidance – including Interpretive Letters 1170 and 1183 – and underscores the OCC’s recognition of cryptoasset custody as a modern extension of traditional bank custody services, while also emphasizing the importance of risk management and regulatory compliance in these activities. The following are key elements of the Interpretive Letter:
- Banks are authorized to provide cryptoasset custody services, including the buying and selling of assets held in custody, at the direction of their customers.
- Banks may outsource cryptoasset custody and execution services to third-party providers, including the use of sub-custodians, provided that robust third-party risk management practices are in place.
- Permissible services include facilitating cryptocurrency and fiat currency exchange transactions, transaction settlement, trade execution, recordkeeping, valuation, tax services, and reporting.
- All cryptoasset custody activities, whether conducted directly or through sub-custodians, must be performed in a safe and sound manner and in full compliance with applicable laws and regulations.
- If a bank acts in a fiduciary capacity, it is required to comply with the relevant regulatory requirements under 12 C.F.R. part 9 (for national banks) or part 150 (for federal savings associations).
Federal Reserve
Fed rescinds guidance on bank crypto-related activities, joining FDIC and OCC. On April 24, the Federal Reserve announced that it has withdrawn its 2022 supervisory letter to member banks regarding their participation in cryptoasset activities. The Fed’s 2022 supervisory letter required state member banks to provide advance notice of planned or current cryptoasset activities. Now, banks will no longer have to provide notification. Instead, banks' cryptoasset activities will be monitored “through the normal supervisory process.” The Fed also joined the OCC in withdrawing from a January 2023 statement and a February 2023 statement. Each statement was jointly issued by the agencies regarding bank cryptoasset activities.
Additionally, the Fed is rescinding its 2023 supervisory letter regarding the supervisory nonobjection process for state member banks to engage in dollar token activities. The Fed’s announcement follows similar recent moves by the other two key federal banking regulators, the Federal Deposit Insurance Corporation (FDIC) and the OCC, which similarly clarified that banks are permitted to engage in crypto-related activities under the normal supervisory process applicable to other permissible bank activities and are no longer required to receive explicit permission from regulators to do so.
FinCEN
FinCEN finds Cambodia-based Huione Group to be of primary money laundering concern. On May 1, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced that FinCEN issued a finding and notice of proposed rulemaking under the USA PATRIOT Act that identifies Cambodia-based Huione Group as a financial institution of primary money laundering concern and proposes to sever its access to the US financial system. FinCEN asserts that, "Huione Group serves as a critical node for laundering proceeds of cyber heists carried out by the Democratic People’s Republic of Korea (DPRK), and for transnational criminal organizations (TCOs) in Southeast Asia perpetrating convertible virtual currency (CVC) investment scams, commonly known as ‘pig butchering’ scams, as well as other types of CVC-related scams," having laundered at least $373 million worth of CVC.
SEC
SEC releases crypto FAQs. On May 15, US Securities and Exchange Commission (SEC) Commissioner Hester M. Peirce issued "An Incremental Step Along the Journey," a statement addressing the SEC's Division of Trading and Markets' release of FAQs concerning cryptoasset activities and distributed ledger technologies. These FAQs clarify the application of existing broker-dealer financial responsibility and transfer agent rules to cryptoassets. Commissioner Peirce acknowledged that many responses reiterate current regulations and highlighted the FAQs' discussion on the applicability of broker-dealer custody and capital rules to cryptoassets. The FAQs:
- Address in-kind creations and redemptions for spot cryptoasset exchange-traded products (ETPs)
- Address the net capital treatment of proprietary positions in bitcoin and ether
- State that non-security cryptoassets are not protected by the Securities Investor Protection Act of 1970, and
- Include questions related to transfer agents and may be useful for entities considering using tokenized securities.
Commissioner Peirce discussed her view that this initiative is a constructive step in the SEC's ongoing efforts to clarify the SEC's regulatory framework to the crypto landscape, and continued to urge market participants to engage with the SEC.
STATE DEVELOPMENTS
UCC Article 12
Additional states adopt UCC Article 12 on controllable electronic records. The following states are joining the 24 states and the District of Columbia in adopting the 2022 Amendments to the Uniform Commercial Code (UCC), including Article 12 governing property rights of intangible digital assets as Controllable Electronic Records (CERs). For more information on CERs under UCC Article 12, see our prior articles from May 2023, July 2023, and January 2025.
- Arkansas: HB 1746 was enacted on April 22 and excluded central bank digital currency from the definition of "money."
- Montana: SB 426, signed on April 17, becomes effective on October 1, and excludes from the definition of "money" any medium of exchange "not in an electronic form."
- Oregon: SB 167 was signed on May 7 and excludes from the definition of money "an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government."
- Vermont: H 206 was signed on May 13 and also excludes from the definition of money "an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government."
The Florida legislature also passed HB 515, which will adopt UCC Article 12 if signed by Governor Ron DeSantis. HB 515 defines the term "electronic money" as "money in electronic form" and excludes from the definition of "money" central bank digital currency and "money in electronic form that cannot be subjected to control.
Digital assets
New Hampshire authorizes strategic crypto reserve. On May 7, New Hampshire enacted HB 302, which permits the State Treasurer to invest public funds digital assets and precious metals as part of a strategic reserve. The law defines key terms, including "exchange-traded product," "qualified custodian," and "secure custody solution," and establishes detailed requirements for the custody and security of digital assets. Under the new framework, the State Treasurer may allocate up to five percent of total public funds from the general fund, the revenue stabilization fund, and other legislatively authorized funds to investments in precious metals and digital assets. According to the law, eligible digital assets must have a market capitalization exceeding $500 billion, averaged over the previous calendar year. The statute prescribes that digital assets may be held directly by the State Treasurer using a secure custody solution, by a qualified custodian, or through an exchange-traded product issued by a registered investment company. Secure custody solutions are required to meet stringent security standards, including exclusive control of cryptographic private keys by the government entity, multi-party governance, disaster recovery protocols, and regular security audits.
Arizona Governor signs multiple crypto laws and vetoes others. Arizona’s Governor Katie Hobbs approved HB 2749, which integrates digital assets such as cryptocurrencies and virtual currencies into the state’s unclaimed property system. The new law defines "digital assets," introduces terms like "airdrop" and "staking," and sets clear procedures for reporting, holding, and transferring unclaimed digital assets. Under the new law, businesses holding these assets for others must track owner communications and report unclaimed property after three years of inactivity, delivering the assets in their native form to the Arizona Department of Revenue or a qualified custodian. The law also allows the state to stake or receive airdrops on unclaimed assets, with any resulting rewards directed to a newly established Bitcoin and Digital Assets Reserve Fund. After a three-year holding period, the Department of Revenue is required to sell listed digital assets at prevailing market prices, with proceeds managed by the State Treasurer.
Governor Hobbs also signed HB 2387, which contains consumer protection requirements for crypto kiosk operators. The crypto kiosk law (1) mandates clear fraud warnings, customer acknowledgment of risks, and detailed transaction receipts and (2) requires a $2,000 daily transaction cap for new users, the provision of 24/7 live customer support, and measures designed to mitigate fraud risks, particularly for vulnerable populations such as seniors.
The vetoed bills included SB 1373, which proposed the creation of a strategic reserve fund using seized cryptoassets; SB 1024, which would have permitted state agencies to invest in cryptocurrencies, but was deemed risky by legislators according to the veto letter; and SB 1025, which would have permitted state retirement assets to be invested in crypto currency. The veto letter emphasized that the current volatility in crypto markets makes such assets unsuitable for safeguarding general fund dollars.
Money transmission
Colorado’s adoption of MTMA unclear as to cryptocurrency. On April 16, Colorado enacted HB 25-1201, which will replace the state’s existing money transmitter law with the Money Transmission Modernization Act (MTMA), consistent with many other states that have adopted the MTMA. The adoption of the MTMA could impact how Colorado regulates the movement of digital assets. Interim Guidance issued by the Colorado Division of Banking (DOB) back in September 2018 had clarified that under the then law, "cryptocurrencies are not recognized as legal tender" and therefore "the complete absence of fiat currency from a transmission from one consumer to another is not money transmission." Under the 2018 interim guidance, licensure was required when: (1) a person engaged in the business of selling and buying cryptocurrencies for fiat currency on an exchange, (2) a Colorado customer could transfer cryptocurrency to another customer within the exchange, and (3) the exchange had the ability to transfer fiat currency through the medium of cryptocurrency. Actors in the space not currently licensed in Colorado are encouraged to seek clarification from the DOB and/or monitor public statements from the DOB for any indication that Colorado will begin regulating the movement of digital assets. The new law is set to take effect “at 12:01 am on the day following the expiration of the ninety-day period after final adjournment of the general assembly,” which will be later in 2025, absent any referendum petition.
ENFORCEMENT ACTIONS AND LITIGATION
FEDERAL
Securities
SEC charges crypto founder with $198 million fraud scheme. On April 22, the SEC announced charges against Ramil Palafox, founder of PGI Global. The company allegedly used multi-level marketing tactics to sell membership packages on promises of high returns from its artificial intelligence (AI)-based crypto and foreign exchange trading activities. According to the complaint, however, Palafox misappropriated more than $57 million to buy luxury goods, supercars, and pay out prior investors. The SEC’s charges parallel criminal charges brought by the US Attorney’s Office for the Eastern District of Virginia.
Celsius founder sentenced to 12 years for fraud and market manipulation. On May 8, the US Attorney’s Office for the Southern District of New York announced that Alexander Mashinsky had been sentenced to 12 years in prison for committing securities and commodities fraud while he was the CEO of now-bankrupt crypto lending platform Celsius Network. According to the indictment, Mashinsky misled customers about Celsius’s CEL token through market manipulation tactics and misappropriating customer assets to support CEL’s price. In addition to the prison term, the court ordered Mashinsky to forfeit more than $48 million.
Father sentenced to 18 years for father-son crypto fraud scheme. On April 23, the US Attorney’s Office for the Southern District of New York announced that Eugene Austin, Jr. had been sentenced to 18 years in prison for stealing more than $12 million in money and cryptocurrency from dozens of investors together with his son Brandon Austin. The father-son team offered fake cryptocurrency investments while spending investors’ money on personal expenses and Ponzi payments to earlier investors. Brandon Austin was previously sentenced to four years in prison.
SEC drops enforcement actions against Helium, Dragonchain, and PayPal. The SEC continued its campaign of dismissing or dropping enforcement actions against crypto industry participants, as covered in our March and April issues. On April 24, the SEC announced that it had dismissed charges against decentralized wireless network provider Helium for failing to register a securities transaction, while settling charges that Helium made misrepresentations in its offer and sale of traditional stock. Also on April 24, the SEC filed a joint stipulation to dismiss its civil enforcement action Dragonchain and its founder. The SEC had charged Dragonchain with registration failures after raising $16.5 million to launch DRGN token in 2017. Finally, on April 30, PayPal disclosed in public filings that the SEC had dropped its investigation of PayPal’s dollar-backed stablecoin PYUSD.
Tax
USAG charges CryptoPunks seller with tax evasion. On April 11, the US Attorney’s Office for the Middle District of Pennsylvania announced that Waylon Wilcox had been charged and pleaded guilty to filing false tax returns. Wilcox was allegedly an early holder of the historic CryptoPunks NFT collection and, in 2021 and 2022, sold 97 CryptoPunks for more than $12 million. Wilxoc denied selling any digital assets on his income tax returns.
SPOTLIGHT ON INTERNATIONAL DEVELOPMENTS
Brazil Supreme Court permits seizure of cryptoassets. The Brazilian Superior Court of Justice ruled in decision 2.127.038/SP (special appeal) that courts may order cryptocurrency exchanges to disclose and allow the seizure of cryptoassets held by debtors in enforcement proceedings. The court acknowledged that cryptoassets, while not legal tender, have economic value and can serve as a means of payment or investment, thus constituting assets subject to execution under Brazilian law. The decision emphasized that the lack of detailed regulation does not preclude judicial access to such assets, especially considering existing rules requiring exchanges to report cryptoassets’ transactions to tax authorities. The decision supports creditors’ rights and judicial efficacy, permitting digital wallet investigations when conventional asset tracing fails. The decision can be accessed here (in Portuguese).
Cryptoasset firms to be brought within the scope of the UK regulatory perimeter. On April 29, the UK HM Treasury (HMT) published the Draft Instrument and a policy note for the regulation of certain activities relating to cryptoassets and stablecoins. This comes hot on the heels of the publication of the UK Financial Conduct Authority (FCA) cryptoassets roadmap, and discussion paper relating to the creation of a new UK tailored cryptoassets regime.
The UK is somewhat behind the European Union, which has already established a tailored regime for cryptoassets activities through the Markets in Crypto-Assets regulation (MiCA), which came into force on December 30, 2024.
The UK Chancellor Rachel Reeves has confirmed that the UK intends to work closely with counterparts in the US to encourage and facilitate “responsible regulation of digital assets.” The UK regime is expected to be further developed during the course of 2025 with the publication of consultation papers, policy statements, and final rules. The regime is expected to “go live” during 2026. Read more.
UK cryptoasset regulation: FCA starts discussions on the shape of regulation. On May 2, the UK Financial Conduct Authority (FCA) published a discussion paper, which seeks views on the rules that should apply to persons undertaking some of the new cryptoassets and stablecoin activities outlined in the HMT draft statutory instrument (the Draft Instrument) and policy note (the Discussion Paper). This Discussion Paper starts the process for establishing outcomes and implementation pathways for regulation.
There is much that takes inspiration from UK MiFID. The proposals cover the breadth of client types. In line with overarching policy and the FCA’s approach to date, there is a particular focus on customer protection for the retail clients and cross-border business practices targeting retail clients, with proposals requiring on-shoring.
The Discussion Paper does not cover rules on issuing a qualifying stablecoin and safeguarding. These will be addressed in a separate consultation paper issued in Q2 of 2025. This will be published alongside a consultation paper on the prudential framework for cryptoassets and prudential requirements for qualifying stablecoins and the safeguarding activity. Read more.
BIS issues working papers and reports on tokenization and crypto. The Bank for International Settlements (BIS) issued working papers on tokenization and cryptocurrencies in decentralized finance (DeFi) and tokenization projects of central banks:
- “Cryptocurrencies and decentralised finance: functions and financial stability implications” was published in April and analyzes the features of cryptocurrencies and DeFi that "introduce new financial stability risks." The paper also examines key developments, such as smart contracts, decentralized exchanges (DEXs), stablecoins, and new forms of central bank money. The findings "suggest that DeFi poses significant challenges, including new forms of information asymmetries, market inefficiencies and the risk of [cryptoization] in emerging markets." The report proposes tailored regulatory interventions and a framework for regulation.
- “DeFiying gravity? An empirical analysis of cross-border Bitcoin, Ether and stablecoin flows” was published in May and investigates trends and drives (or cross-border flows) in BTC, ETH, USDT, and USDC. The paper's findings include speculative motives and global funding conditions as key drivers of native cryptoasset flows. Transactional motives play a significant role in cross-border flows for stablecoins and low-value Bitcoin transactions. Further, according to the paper, geographic barriers play a diminished role compared to traditional financial flows, and capital flow management measures appear ineffective.
- “Leveraging tokenisation for payments and financial transactions” was published in April by the BIS Consultative Group on Innovation and the Digital Economy (CGIDE). The report discusses theoretical and real-world use cases of tokenization, which include initiatives run by the Central Bank of Brazil and the Central Bank of Colombia, and private sector-led initiatives discussed within the CGIDE during 2023 and 2024. In addition to use cases and progress to date, the report also explores some preconditions and other considerations for tokenization.
DLA PIPER NEWS
- The Financial Times recognizes DLA Piper as one of the Most Innovative Law Firms in North America.
- The Legal 500 ranks DLA Piper Tier 1 in FinTech: Crypto. DLA Piper was also ranked in Tier 2 for FinTech, and Margo Tank was ranked as a “Leading Individual.”
- Chambers FinTech Legal ranks DLA Piper in four categories including Band 2 for Blockchain and Digital Assets, and Band 3 for Payments and Lending, with Margo Tank individually recognized in Blockchain and Digital Assets and Payments and Lending.
- DLA Piper’s Commodities, Digital Assets, and Carbon Compliance and Enforcement team draws on decades of collective experience in the commodities and securities industry to help companies navigate new and complex commodities enforcement matters, including those related to agriculture, metals, energy, digital assets, and carbon/sustainable commodities, among others.
UPCOMING AND RECENT EVENTS
- Michael Fluhr presented as part of a panel on developments in crypto litigation at Crypto Law 2025: Evolving Best Practices for an Industry in Transition, on May 7 at PLI's California Center in San Francisco and virtually. The panel covered recent developments with respect to securities class actions, NFT-related litigation and DAO-related litigation.
- David Stier spoke alongside other industry professionals on the digital assets panel on April 25 at US-India Strategic Partnership Forum's inaugural US-India Economic Forum, themed “Future Forward: Navigating Finance, Innovation, and Economic Growth in 2025.”
- DLA Piper presented the 2nd Annual Global Digital Forum – Financial Services Evolution or Revolution? on February 25 at the DLA Piper’s London office and virtually. The forum was co-organized with Global Digital Finance and covered the opportunities that digital finance brings, spanning key jurisdictions and a range of topics including digital bonds, real-world asset tokenization, stablecoins, DeFi, AI, and digital asset litigation, as well as the policy landscape in agenda-setting regions such as the UK, US, EU, and Middle East. Baroness Kay Swinburne presented the keynote address. Prior to her current legislative, advisory, and financial services consulting roles, Baroness Swinburne worked in financial services both before and after being elected to the European Parliament (2009–2019). She also served as a leading EU legislator and Vice Chair of the Economics and Monetary Affairs Committee, helping shape EU and global financial services legislation.
- David Stier spoke alongside other industry professionals at the 21st Puerto Rican Symposium of Anti-Money Laundering in San Juan, Puerto Rico, on February 21 on a panel titled, “Anti-Money Laundering Under a New US Administration: Policy Shifts and Market Impact.”
PUBLICATIONS
- DLA Piper published its global financial services report, Financial Futures: Disruption in US and Global Financial Services, after asking nearly 800 financial services decision makers around the world about key disruptors impacting senior leaders in financial institutions and fintechs. Check out our report and read about the challenges and opportunities that AI, digitization, and ESG pose for the financial services industry.
- In the book, Banking [on] Blockchain: A Legal and Regulatory Primer, published by the American Bar Association, David Stier, Emily Honsa Hicks, and Eric Hall co-authored a chapter on anti-money laundering (AML)/know your customer (KYC) requirements and the Bank Secrecy Act (BSA), as well as provided general editorial assistance on other chapters. The book is a comprehensive guide to the legal and regulatory landscape surrounding the use of blockchain technology, decentralization, and digital assets within the financial services, and offers guidance on how financial institutions may navigate the complex regulatory environment.
- Cryptocurrency and Digital Asset Regulation, published by the American Bar Association and co-edited by Deborah Meshulam and Michael Fluhr, includes chapters by Meshulam, Fluhr, and Margo Tank.
Listen
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Contacts
Learn more about our Blockchain and Digital Assets practice by contacting any of our editors:
