Key Developments and Industry Insights From Katten’s Crypto in Focus Webinar (Part 1)

Katten and CRC-Oyster teamed up to launch a three-part webinar series on “Crypto in Focus: Regulation, Risk and the Road Ahead.” Part 1, “Digital Assets Regulatory Updates,” brought together Katten Partners Dan Davis, Co-Chair of Financial Markets and Regulation, Susan Light, Co-Chair of Broker-Dealer Regulation, with CRC-Oyster Managing Directors Jeff Gearhart and Dan Garrett, to discuss the changing legislative, regulatory and market environment for digital assets and cryptocurrencies in the United States. The session focused on significant new laws, regulatory initiatives and the practical implications for market participants, retail investors and service providers.

Legislative Developments

The GENIUS Act marks a notable milestone as the first federal legislation specifically addressing digital assets, with a focus on payment stablecoins.[1] Signed into law by President Donald Trump, the GENIUS Act establishes a regulatory perimeter for payment stablecoins, including federal and state registration pathways, reserve requirements and business limitations for issuers. It also recognizes the utility of payment stablecoins as collateral and for fund transfers, aiming to provide greater regulatory clarity and stability in this segment of the market.

The Clarity Act, which passed the House and is pending in the Senate, seeks to address the broader market structure for digital assets. The bill proposes clearer delineation of regulatory authority between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and introduces new registration categories for entities involved in spot digital asset activities. If enacted, the Clarity Act would grant the CFTC primary oversight of spot digital asset markets, filling a current regulatory gap.

Regulatory Initiatives

Federal regulatory bodies have significantly increased their engagement with crypto. The White House has issued multiple executive orders and established task forces to coordinate policy across agencies.[2] The SEC, CFTC, as well as banking regulators are all actively developing guidance and seeking industry input.[3]

The SEC has established a Crypto Task Force, led by Commissioner Hester Peirce, and has issued new guidance on digital asset activities.[4] Recent public statements from SEC leadership emphasize a commitment to ensuring US leadership in digital asset innovation and to providing timely guidance on best practices for distribution, custody and trading.[5] The Financial Industry Regulatory Authority (FINRA), while reliant on SEC rulemaking, is also engaging with market participants and focusing on core regulatory concerns such as accurate public communications, supervision, anti-money laundering and recordkeeping.[6]

The CFTC continues to issue guidance and grant exemptive relief,[7] including recent requests for comment on leveraged spot digital asset products.[8] The agency is exploring ways to provide additional clarity and facilitate the development of new products within its existing authorities.

Industry Response and Market Implications

Traditional financial institutions and service providers are increasingly seeking to integrate digital assets into their business models, while decentralized finance (DeFi) and international entities are exploring entry into the US market. There is a strong emphasis on education and collaboration, as firms work to understand the regulatory environment and prepare for forthcoming changes.

Key infrastructure providers, such as the Depository Trust & Clearing Corporation (DTCC), are developing standards and protocols to support blockchain interoperability and certification, which is expected to enhance comfort and participation among larger market participants.[9] Industry partnerships and workshops are underway to test and refine new products and services.

Regulatory Engagement and Best Practices

A notable shift has occurred in regulatory engagement, with agencies now more open to dialogue and collaboration with industry participants. Law firms and consultants are facilitating these interactions, helping clients navigate complex and evolving requirements.[10] While regulatory frameworks are still under development, there is a clear trend toward increased transparency, engagement and the establishment of best practices.

Ongoing Challenges

Despite the progress, several challenges remain. Key regulatory definitions and requirements, such as those related to possession and control of digital assets, are still being clarified. FINRA’s ability to approve new business models is limited by the current absence of a comprehensive regulatory framework from the SEC. Firms must continue to exercise diligence in areas such as customer communications, supervision, anti-money laundering and recordkeeping.

Conclusion

The US digital asset regulation is undergoing rapid transformation, with significant legislative and regulatory initiatives underway. Market participants should anticipate continued developments and increased regulatory clarity in the near term. Engagement with regulators, industry collaboration and adherence to evolving best practices will be critical for firms seeking to participate in this dynamic sector. Future webinars and industry updates are planned to provide ongoing guidance as the regulatory environment continues to evolve.

View the recording of Crypto in Focus: Regulation, Risk and the Road Ahead - Part 1: Digital Assets Regulatory Updates. 

[1]See Katten’s client advisory on the GENIUS Act here.

[2]See Katten’s Quick Reads coverage of Executive Order 14178 and Executive Order 14233 here and  here.

[3]See Katten’s client advisory on this topic here.

[4]See Katten’s Quick Reads coverage of the SEC Crypto Task Force here.

[5]See Katten’s Quick Reads coverage of recent SEC staff statements here.

[6]See Katten’s Quick Reads coverage of this topic here.

[7]See Katten’s client advisory on this topic here.

[8]See Katten’s Quick Reads coverage of this topic here.

[9]See Katten’s client advisory on tokenization and real-world assets here.

[10]See Partner and Co-Chair Dan Davis’s May 6, 2025, testimony before the House Agriculture Committee here.