Welcome to the Digital Assets + Blockchain Newsletter. In this newsletter, we’ll track the regulatory, legislative, and enforcement developments reshaping the crypto and digital assets landscape — from the GENIUS Act’s stablecoin framework to the SEC’s and CFTC’s evolving posture on digital commodities to custody rules, licensing regimes, and beyond.
In This Issue:
In the Spotlight
Crypto And The Midterms: What It Will Take To Reach $100k Bitcoin
Genna Garver, a co-leader of Troutman Pepper Locke’s Digital Assets + Blockchain team was quoted in the October 8 Investor’s Business Daily article, “Crypto and the Midterms: What It Will Take to Reach $100k Bitcoin.” Click here to read the full article.
SEC and CFTC Advance Targeted Crypto Relief as CLARITY Stalls
On September 17, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission’s (CFTC) Market Participants Division each announced relief for onchain trading: the SEC an Innovation Exemption for tokenized stock, and CFTC staff a no-action position for passive trading software. Both came two days after the Senate failed to invoke cloture on the motion to proceed to the Digital Asset Market Clarity Act (CLARITY Act), 49 to 50. That vote leaves the bill’s path uncertain. For more information, click here.
Federal Developments
October 14, SEC Official Expects Securities Perpetual Futures This Quarter, 24/7 Equity Trading to Follow
Speaking at the Security Traders Association’s market structure conference, SEC Division of Trading and Markets Director Jamie Selway said five CFTC-registered designated contract markets have filed Form 1-N to register as security futures exchanges. He expects at least four to begin trading perpetual futures on securities this quarter. Selway described the SEC’s September 17 Innovation Exemption for tokenized NMS stocks as an opportunity to gain experience with a promising technology during limited deployment under a principle of “innovation without arbitrage.” That experience could inform rulemaking to integrate digital assets more fully into market structure. He also expects equity markets to move soon to 23-by-5 trading, with 24-by-7 trading likely to follow, and said the Division is reviewing Regulation NMS Rules 610 and 612 by year-end. For more information, click here.
October 14, OCC Debanking Review Finds Large Banks Restricted Digital Asset Businesses
The Office of the Comptroller of the Currency (OCC) released its review of debanking practices at the nine largest national banks, as directed by Executive Order 14331, “Guaranteeing Fair Banking for All Americans,” issued in August 2025. The report found that multiple banks maintained policies restricting services to particular industries and customers across the political spectrum, and it attributed many of those restrictions to “inexact” reputational-risk policies that “infused the value judgments of stakeholders into banks’ business decisions.” The OCC also found that many banks also restricted banking services for digital asset issuers, exchanges, and administrators, often based on financial-crime considerations. The OCC could not quantify the full extent of debanking and provided no crypto-specific examples. Because the OCC, Federal Deposit Insurance Corporation, and Federal Reserve have already barred supervisors from using reputational risk, the report is more likely to support future enforcement and supervisory focus than to establish a new rule. For more information, click here.
October 9: CFTC Issues the Swap Definition Rules: Casino-Style Gambling Excluded Effective on Publication, Event Contracts Proposed In
Both rules that the CFTC sent to the Office of Management and Budget (OMB) on September 28 came out Friday. The first rule, an interim final rule, excludes from the definition of “swap” any product offered by a person licensed or authorized to offer gambling under state law or tribal law under the Indian Gaming Regulatory Act (IGRA), acting within that authority, if the product is not traded on a board of trade, exchange, swap execution facility, or any multilateral or individually negotiated market. Sportsbook wagers and casino table, slot, and electronic game wagers are the named examples. The CFTC’s reasoning is that house-set, bilateral prices make those products not inherently tradeable. The interim rule takes effect on Federal Register publication, with 30 days for comment. The companion proposed rule would amend the definition of “swap” in Commodity Exchange Act (CEA) § 1a(47) to expressly include “event contracts, including those based on sports, politics, cultural, and weather-related events,” also with a 30-day comment period. CFTC Chairman Selig said, “These products are commodity derivatives squarely within the CFTC’s regulatory remit.” For more information, click here and here.
October 7 and 9, DOJ Continues Prosecution of Illicit Crypto Activity
The U.S. Department of Justice (DOJ) announced three significant criminal developments. A federal jury convicted Jonathan Spalletta of computer fraud and money laundering arising from two 2021 hacks of Uranium Finance that allegedly obtained approximately $54.7 million in cryptocurrency. Prosecutors also indicted the creator of Kishu Inu for allegedly operating a $9 million rug-pull scheme involving false statements to investors and undisclosed token sales. Separately, a cofounder and operator of the Empire Market darknet marketplace was sentenced to 40 years in prison and agreed to forfeit approximately 1,230 bitcoin, 24.4 Ether, and three Virginia properties. For more information, click here, here, and here.
October 5, CFTC Issues Advance Notice of Proposed Rulemaking on Crypto Market Structure
The CFTC has published an advance notice of proposed rulemaking (ANPR) titled “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets,” which cleared the OMB last month. The ANPR floats two frameworks. Regulation CTX would govern retail commodity transactions in crypto assets under § 2(c)(2)(D) of the CEA, meaning retail trades that are leveraged, margined, or financed and already sit in the CFTC’s jurisdiction. Regulation CAM would create a new “crypto asset market” category of designated contract market (DCM) registration for platforms that offer those transactions. The CFTC asks for comment on how to prevent abusive practices under a uniform national regime, which crypto-specific best practices to adopt based on its oversight since 2014, and whether to create the new registration category by rule. The ANPR was published in the Federal Register on October 13, 2026, at 91 FR 64811, and comments are due December 14, 2026. In a Wall Street Journal op-ed the same day, Chairman Selig described this approach as a “purpose-fit option:” nothing would require crypto assets to trade on CFTC-registered platforms, because the agency lacks that authority without Congress, but exchanges that opt in could offer retail leverage under a single federal regime instead of obtaining state licenses. Spot trading, meaning non-leveraged purchases and sales, would remain outside the framework. For more information, click here.
October 5, FinCEN Withdraws the 2020 Unhosted Wallet Proposal and the 2023 Mixing Special Measure
The Financial Crimes Enforcement Network (FinCEN) withdrew two long-pending proposals: the December 2020 notice that would have imposed recordkeeping, verification, and reporting requirements on certain convertible virtual currency (CVC) transactions involving unhosted wallets, meaning wallets not held by a financial institution, and the October 2023 proposal to designate CVC mixing (services that obscure the source of digital asset transfers) as a class of transactions of primary money laundering concern under § 311 of the USA PATRIOT Act. Both withdrawals were published in the Federal Register and took effect October 6. FinCEN said it considered the comments received and is acting “as part of the Trump Administration’s deregulatory agenda” and to keep digital asset rules “fit-for-purpose.” The withdrawal comes four days after the Treasury Department’s designation of A7 and FinCEN’s companion proposal (discussed below), suggesting the agency is narrowing its focus to named networks rather than classes of activity. For more information, click here.
October 5, CFTC Staff Clears DCMs to Convert Perpetual-Style Index Futures Into True Perpetuals
The CFTC’s Division of Market Oversight issued no-action relief allowing DCMs to remove the expiration dates from existing perpetual-style broad-based security index futures and convert them into true perpetual contracts, meaning futures with no set expiration date. The amendments must go through the Regulation 40.5 or 40.6 process, and each DCM must solicit feedback from participants with open positions, give advance notice and a chance to exit, provide risk disclosures, and change nothing else in the contract terms. The relief applies to positions that would otherwise expire on October 20, 2026, so the window is short. It mirrors the relief the Division gave for digital commodity perpetuals earlier this year and extends the model of listing perpetual contracts on a DCM to equity index products. For more information, click here.
October 5, CFTC Chairman Michael Selig Addresses Blockchain Regulation at Fordham Symposium
CFTC Chairman Michael Selig delivered remarks on blockchain regulation at the Fordham Law Blockchain Regulatory Symposium in New York. He announced an advance notice of proposed rulemaking on Regulation CTX and Regulation CAM, which would let crypto asset exchanges offering retail margined, leveraged, or financed trading register with the CFTC as designated contract markets or as a new “crypto asset market” sub-category. Selig described the framework as a voluntary federal option, said the CFTC is using its existing authority after Congress did not pass the CLARITY Act, and proposed to treat delivery to a non-custodial wallet within 28 days as “actual delivery.” For more information, click here.
October 5, Modern Treasury and Rain Seek OCC National Trust Bank Charters
Modern Treasury applied to establish a limited-purpose national trust bank that would combine its payments and settlement infrastructure with digital asset custody services, without lending or issuing stablecoins. Rain separately applied to establish Rain National Trust Bank, a national trust bank that would provide custody, reserve management, and stablecoin issuance and redemption services under a federal framework. If approved, Rain’s proposed bank would not accept deposits, make commercial loans, offer consumer accounts, or use custody assets or stablecoin reserves for lending. The applications come as a bank trade group has sued the OCC over its approvals of crypto trust charters. For more information, click here and here.
October 2, Community Bankers Sue the OCC Over Crypto Trust Bank Charters
The Independent Community Bankers of America (ICBA) filed an Administrative Procedure Act suit in the U.S. District Court for the District of Columbia against the OCC and Comptroller Jonathan Gould. The suit challenges three actions: the OCC’s March 2, 2026 final rule; Interpretive Letter 1176 (which Gould wrote in January 2021 when then serving as chief counsel); and the conditional national trust bank charter the OCC granted in February 2026 to Protego Holdings, a digital asset custody, trading, lending, and issuance firm. ICBA argues the 1978 amendment to the National Bank Act does not authorize trust banks that neither take deposits nor act as fiduciaries, that the major questions doctrine requires clear congressional authorization for decisions of major economic significance, that the rule is arbitrary and capricious, and that the 2021 letter was issued without notice and comment. It asks the court to vacate the rule, the letter, and Protego’s approval, and to bar the OCC from relying on either the rule or the letter to grant charters. The complaint says the OCC has approved or conditionally approved 21 trust banks under this administration, at least 13 of them crypto companies. In our view, every pending crypto charter now carries litigation risk. For more information, click here.
October 2, Treasury and DOJ Target Hamas Financing Network
The U.S. Department of the Treasury, OFAC, the Federal Bureau of Investigation, and DOJ announced coordinated actions against a Hamas financing network alleged to have raised and transferred funds through sham charities and cryptocurrency channels. OFAC designated an operative, two France-based individuals, and affiliated entities, while DOJ unsealed charges and announced arrests in the United States and France. Treasury described the matter as a multiyear scheme that allegedly moved more than $2 million to Hamas and emphasized the use of sanctions, criminal prosecutions, and international cooperation to disrupt terrorist financing. The matter is a reminder that sanctions and anti-money laundering compliance programs at financial institutions and virtual asset service providers should account for charitable-giving and cryptocurrency channels as potential vehicles for terrorist financing. For more information, click here.
October 1, SEC Proposes Crypto Custody Rules for Advisers and Funds: State Trust Companies Qualify, Self-Custody Allowed When No Custodian Exists
The SEC proposed “Adviser and Regulated Fund Custody Rules; Crypto Custody Rules,” the custody piece of Project Crypto that Chairman Atkins previewed in September. Under the proposal, permitted custodians of crypto assets that are funds or securities would include banks, broker-dealers, futures commission merchants (FCMs), and state-chartered trust companies that are authorized by their state banking regulator to custody crypto and that maintain written safeguarding policies. An adviser could self-custody client crypto only if it meets several conditions: it determines quarterly that no permitted custodian is available, documents its expertise for each asset, requires two-person authorization of every transaction, runs an annual cybersecurity review, obtains internal control reports, and sends clients quarterly statements listing addresses and transactions. A new fund self-custody rule would let a regulated fund hold crypto through its adviser under the same conditions, with oversight by the fund’s board. The proposal also drops the requirement that the accountants who examine custody-rule compliance be registered with and inspected by the Public Company Accounting Oversight Board (PCAOB), and it replaces the 2023 safeguarding proposal that the SEC withdrew in June 2025. Comments are due 60 days after publication in the Federal Register. For more information, click here.
October 1, Treasury Designates Russia’s A7 Payment Network a Transnational Criminal Organization; FinCEN Proposes a Transmittal Ban on Its Sub-Agents
Under its Operation Economic Outcast, Treasury’s Office of Foreign Assets Control (OFAC) designated the A7 Network, its sub-agent shell companies, and the ruble-backed A7A5 token (issued by Old Vector LLC, which was previously sanctioned) as a significant transnational criminal organization for moving money on behalf of Iran and Russia. Treasury says A7 sub-agents processed more than $17 billion between January 2025 and June 2026. The network claimed 2,000 daily transactions worth roughly 7.5 trillion rubles, about 13% of Russia’s 2025 foreign trade. FinCEN issued a companion notice of proposed rulemaking that would prohibit transmittals of funds involving A7 sub-agents, along with an alert listing red flags. Treasury Secretary Bessent said, “Treasury is dismantling the financial infrastructure that allows Iran and other adversaries to evade sanctions.” The red-flag alert is the operative document for compliance teams at exchanges and stablecoin issuers. For more information, click here.
State Developments
October 9, New York Attorney General Secures Permanent Industry Ban and Up to $35 Million from Former Celsius CEO Alex Mashinsky
New York Attorney General Letitia James announced a settlement with Alex Mashinsky, co-founder and former CEO of cryptocurrency lending platform Celsius Network LLC, that permanently bars him from the securities, commodities, and cryptocurrency industries and could bring New York up to $35 million. The attorney general sued Mashinsky in 2023, alleging that he defrauded hundreds of thousands of investors, including more than 26,000 in New York. According to the attorney general, he misled them about Celsius’ safety, including claims that it was safer than a bank, to encourage them to deposit billions of dollars in digital assets. The attorney general also alleged that Celsius lost hundreds of millions of dollars on risky investments that Mashinsky concealed, and that he failed to register as a salesperson for Celsius and as a securities and commodities dealer, in violation of New York law. The $35 million is contingent. Mashinsky must pay $25 million if he fails to forfeit $10 million in ill-gotten gains to the federal government, in addition to assets already forfeited, under his federal plea agreement. He must pay another $10 million if he does not serve his full prison sentence. Mashinsky is serving a 12-year federal prison sentence in a parallel criminal case, in which he was also ordered to forfeit more than $48 million. As of August 2026, investors and creditors had received more than $3.4 billion through the Celsius bankruptcy. For more information, click here.
October 8, State Regulators Settle with Crypto Kiosk Operator Coinme for $2.5 Million Over BSA/AML Violations; Coinme Must Exit the Kiosk Business by January 1, 2027
The Conference of State Bank Supervisors (CSBS) announced that 34 state financial regulatory agencies reached a $2.5 million settlement with Coinme Inc., a Seattle-based cryptocurrency money transmitter and virtual currency kiosk operator, for violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws. Coinme agreed to terminate its virtual currency kiosk operations by January 1, 2027, or pay an additional $4 million penalty. It also agreed to hire an independent consultant to review the effectiveness of its BSA/AML program and to report the findings to the states within six months, after which it will have 12 months to correct any deficiencies. Alaska, Arkansas, Georgia, Illinois, North Carolina, Ohio, and Washington led the enforcement effort. For more information, click here.
October 1, Florida’s Payment Stablecoin Issuer Law Takes Effect, Built to the GENIUS Act Template
Chapter 2026-176 (HB 175), approved June 26, took effect October 1. The law creates Part V of chapter 560 (§§ 560.501 to 560.506) and § 658.997. It requires a license or certificate of approval from the Florida Office of Financial Regulation (OFR) to issue payment stablecoins, and it imposes 1:1 reserves, monthly reserve disclosure with CEO and CFO certification, and an annual certification to OFR of compliance with the federal GENIUS Act, which Treasury may request. Issuers must transition to federal oversight once they reach $10 billion in stablecoins outstanding. Rulemaking authority is tied to GENIUS Act § 4(a)(4), § 13, and the minimum requirements set by the Stablecoin Certification Review Committee. Because Treasury’s certification procedures have been in effect since September 30, Florida now has an operative regime it can submit to Treasury for certification, ahead of New York, whose Part 202 regulations are still only proposed. For more information, click here.
October 1, Hawaii Bans Cash-to-Crypto Kiosk Purchases Statewide
Act 224 (HB 1642), signed July 9, took effect October 1. Kiosk operators may no longer accept U.S. currency in exchange for digital assets anywhere in the state. Crypto-to-cash and crypto-to-crypto transactions remain allowed. A violation is an unfair or deceptive practice under Hawaii Revised Statutes chapter 481B, with each transaction counted as a separate violation. It appears to be the first statewide ban on the cash-in side of the kiosk business, going further than the fee caps, receipts, and warning labels required by other states’ kiosk laws. For more information, click here.
October 1 and 13, Illinois Digital Asset Tax Delayed Until July 1, 2027, While Constitutional Challenges Proceed
On October 1, the Digital Chamber, the Illinois Blockchain Association, and the state filed an agreed motion asking the Sangamon County Circuit Court to delay implementation of Illinois’ Digital Asset Tax from January 1 to July 1, 2027, and the court approved the delay. On October 13, the state and the plaintiffs in both pending suits filed a joint motion to expedite summary judgment, proposing plaintiffs’ motions on November 4, the state’s response on December 18, replies in January, a hearing between February 8 and 19, and a decision by March 1, 2027. The Act would impose a 0.2% tax on the value of certain crypto purchases and transfers, regardless of whether gains are realized. Brokers must register and collect the tax; customers must self-assess when a broker does not collect; and out-of-state brokers are subject to a $100,000 receipts threshold. The two pending lawsuits allege that the Act violates Illinois’ tax-uniformity requirement the U.S. Constitution’s dormant Commerce Clause, due process, and the Illinois Constitution, and is preempted by the federal Internet Tax Freedom Act. The Department of Revenue’s September 28 draft implementing rules remain open for comment through October 30. The delay does not resolve those underlying challenges. For more information, click here and here.
Additional Updates
October 14, Polygon Closes Coinme Acquisition and Adds State Money Transmitter Licenses
Polygon Labs completed its acquisition of Coinme as part of the $250 million transaction announced in January that also included wallet company Sequence. Coinme brings 37 state money transmitter licenses, 11 exemptions, and FinCEN money services business registration, which Polygon says provide regulated payments coverage in 48 states. Polygon plans to use the licenses to allow businesses to accept funds, settle in stablecoins, and make local-currency payouts. The closing occurred six days after Coinme’s 34-state BSA/AML settlement, meaning Polygon also assumes Coinme’s obligations to exit the cryptocurrency kiosk business by January 1, 2027, and complete an independent review of its AML program. For more information, click here and here.
October 8, Delaware Supreme Court Affirms Chancery Ruling in Empery Digital Proxy Fight; Board Breached Fiduciary Duties by Rejecting Activist’s Nominations
Sitting en banc, the Delaware Supreme Court affirmed Vice Chancellor Will’s August 28 ruling in ATG Capital Opportunities Fund LP v. Lane. The ruling permits ATG Capital’s nominees to stand for election at Empery Digital, Inc.’s October 14 annual meeting. Empery is a Nasdaq-listed digital asset treasury company, and ATG says it owns about 16% of the shares. Chancery held that Empery’s advance notice bylaws did not require the disclosures the board said were missing, and that rejecting the nomination notice was inequitable and a breach of the directors’ fiduciary duties. Although the court found some support for the board’s suspicion that ATG was coordinating with another stockholder, Tice Brown, to liquidate Empery’s bitcoin, it held that the board’s concerns were arguments for the stockholders and not grounds for removing the slate from the ballot. The Supreme Court’s order upholds Chancery’s reading of “participant” under Instruction 3(a)(v) to Item 4 of Schedule 14A, as incorporated into those bylaws. It also held that Chancery did not abuse its discretion in finding that the defendants waived two legal theories raised late in the expedited proceedings: that ATG had to disclose an “agreement, arrangement or understanding” with Brown regardless of whether he was a “participant,” and that Rule 14a-9 required disclosure of ATG’s bitcoin hedge against its Empery position. This appears to be the first Delaware Supreme Court decision in a fight over a digital asset treasury company. For more information, click here and here.
October 8, UK and EU Regulators Address Tokenization, Illiquid Assets, and Stablecoins
The UK Financial Conduct Authority published a consultation paper on fair redemption terms for authorized funds investing in illiquid assets, including tokenized funds and funds holding inherently illiquid assets. Separately, the European Securities and Markets Authority directed authorized crypto platforms to block new access to stablecoins that do not comply with the Markets in Crypto-Assets Regulation within three months, while national authorities oversee existing customer holdings. For more information, click here.
October 6, ECB Executive Board Member Piero Cipollone Discusses Tokenized and Digital Payments
The European Central Bank (ECB) Executive Board Member Piero Cipollone delivered remarks on the digital euro, tokenization, and the role of central banks in the digital age during a Market News International Connect webcast in Frankfurt. He said the ECB’s answer to digital transformation is to extend central bank money into the digital environment while preserving the two-tier monetary system in which public and private money coexist. For retail payments, he said the digital euro would provide a pan-European digital form of central bank money, distributed by banks and other regulated payment service providers, with holding limits and no remuneration to safeguard financial stability. For wholesale markets, he pointed to Pontes, which launched September 21 to settle tokenized transactions in central bank money, and Appia, a work program on the wider tokenized finance ecosystem for which the ECB aims to deliver a blueprint in 2028. He said the digital euro pilot is planned to begin in the second half of 2027 and, assuming legislation is concluded by the end of 2026, the ECB aims to be ready for a potential first issuance in 2029. For more information, click here.
October 4, OKX and ICE Joint Venture Files Notice for a Tokenized Securities Venue Under the Innovation Exemption
OKXICE, the 50-50 venture OKX and Intercontinental Exchange formed in June, filed with the SEC to launch a tokenized securities platform for around-the-clock trading of U.S. stocks, relying on the exemption the SEC unveiled September 17. Tokenized securities are stocks and other securities represented as blockchain-based tokens. The filing covers more than 60 U.S.-listed companies, which would be available for trading throughout the week, and each issuer now has 30 days to object. Former New York Governor Andrew Cuomo, who is co-chair of OKXICE, called it “a landmark step toward a truly global, 24/7 Wall Street.” No launch date was given. It is the first announced test of the issuer-objection mechanism, and the names on the list will show whether public companies use it. The filing comes as the NYSE, Nasdaq, and the London Stock Exchange prepare to launch round-the-clock trading in the coming months.For more information, click here.
October 2, Tokenized Investment and Digital Asset Risk Products Expand
Bybit announced a collaboration with Franklin Templeton that will allow eligible clients to use tokenized money market fund shares as off-exchange collateral, to access USDT and USDC trading credit on the exchange while retaining custody and yield. The shares would be issued through Franklin Templeton’s Benji Technology Platform and held in Bybit’s ByCustody service. The companies said the collaboration is also meant to bring regulated, yield-bearing collateral into onchain markets and includes education initiatives for wallet-based investors. S&P Global Ratings also launched its Vault Risk Assessment, a framework designed to provide independent, forward-looking analysis of risks associated with digital asset lending vaults and onchain investment vehicles. For more information, click here.
Closing Takeaways
Four themes run through this week’s issue. First, with the CLARITY Act stalled, federal agencies are acting on their own authority. The CFTC and SEC advanced rulemakings and relief on event contracts, retail crypto markets, custody, tokenized trading, and perpetual futures, and Treasury and FinCEN moved from broad rules to targeted action against specific networks, including A7 and a Hamas financing network. Second, debanking has become a supervisory focal point. The OCC’s report on the nine largest national banks, and the CFTC’s same-day announcement that it will investigate whether those banks and others complied with federal consumer financial laws, put reputational-risk policies, account closures, and BSA/AML practices under scrutiny from both prudential and consumer regulators. Third,states are taking the lead on consumer-facing issues, particularly stablecoin issuers and crypto kiosks, and are building their own enforcement records. Fourth, the courts are testing the limits of agency and board authority, from the challenge to the OCC’s trust bank charters to the Delaware Supreme Court’s Empery Digital decision. Courts are also being asked to rule on state crypto taxation, as Illinois’ Digital Asset Tax faces expedited summary judgment briefing.
We’ll continue monitoring these developments and publish our next issue on November 5. As always, if you have questions about how any of these developments affect your business, please reach out to a member of our Digital Assets + Blockchain team.