Everything’s Coming Up Roses: Domestic Crypto Regulation in Spring 2025

In Faulkner-esque prose, I walked my readers through the status of Securities & Exchange Commission (SEC) litigation against the most prominent companies in the crypto industry. At that time, the SEC was on a winning streak in court, a streak that continued into the summer of 2024. The future of crypto regulation in the United States was highly uncertain, with huge downside risks for industry players.

Today in spring 2025, we live in a sparkling new crypto world. The blockchain birds are singing happily in the Bitcoin bushes, and the decentralized finance (DeFi) daisies are in full bloom. The SEC has dismissed almost all its pending litigation against large industry participants, and the agency has been buzzing with energy focused on creating less punitive and more favorable regulatory guidance for crypto firms.

On April 10, Paul Atkins was confirmed as the new Chairman of the SEC. He is expected to have a crypto-friendly perspective and should move quickly to provide firm rules of the road for industry. Let’s look at some of the early crypto-friendly moves the Commission has been making and what they may mean for the industry as new leadership takes the helm.

Early Signals From the SEC’s New Crypto Leadership

Immediately after President Trump’s inauguration, the SEC announced the creation of a new Crypto Task Force. Headed by Commissioner Hester Peirce (affectionately known as Crypto Mom by blockchain enthusiasts), the Task Force is composed of a combination of long-tenured SEC lawyers and staffers with backgrounds on the Hill. The Task Force is currently engaged in a variety of regulatory sandbox-y activities, including soliciting written input, meeting with “industry and subject matter experts,” and hosting roundtables. Here are some highlights from the Task Force’s first three months of life, in what the SEC is calling the “Spring Sprint Toward Crypto Clarity.”

A New Look at “Howey” and Securities Analysis

During Gary Gensler’s SEC administration, the agency identified the “Howey” test—a generalized, judge-made analysis—as the relevant guidance for whether or not any particular crypto asset qualified as a “security” subject to the SEC’s jurisdiction. By late 2024, the SEC had alleged in public court proceedings that numerous prominent digital assets qualified as securities—and, in several instances, federal district courts agreed with the agency’s analysis.

The applicability of the federal securities laws to digital assets was one of the first areas of activity for the new SEC administration. In addition to dismissing almost all the agency’s pending Howey litigation, the SEC has begun to explore how the securities laws may—or may not—apply to a variety of crypto assets.

According to the statement, meme coins are not securities because promoters do not pool investor funds for the purpose of developing the coins, and there is no expectation of profits derived from the efforts of others (profits are only expected from the possibility of speculative appreciation). Importantly, the statement does acknowledge that there will be some definitional uncertainty and that labeling a product as a meme coin does not inevitably mean that the SEC will not assert jurisdiction. Finally, the statement makes clear that just because a meme coin is not a security subject to the SEC’s jurisdiction does not mean it is okay for promoters to defraud purchasers; other law enforcement and regulators with broader authority outside of the realm of securities law will remain able to police misconduct.

Following the meme coin statement, in March 2025, the Crypto Task Force held its initial roundtable, titled “How We Got Here and How We Get Out – Defining Security Status.” If you are looking for 3.5 hours of prime time viewing, a recording of the event is posted here and here. If you are not a nerd, here’s a good summary from Gibson Dunn. At a high level, my takeaways from the roundtable are:

1. In the wake of the federal court decisions categorizing many prominent digital assets as securities, significant risks and uncertainties remain for industry participants (even if they are no longer being sued by the SEC).
2. The best path through the woods would be Congressional legislation.

Congress is working on this, and it will be interesting to see whether it can make progress in a highly divided political environment.

Crypto Trading Regulation Roundtable

One of the flash points between the prior SEC administration and industry was the regulatory status of exchanges and trading venues in the business of facilitating crypto transactions. For example, in litigation that was dismissed earlier this year, the SEC had alleged that Coinbase was operating as an unregistered securities exchange, broker, and clearing agency. Industry, in turn, argued that they wanted to be compliant but the SEC had offered no path to do so and was engaged in regulation by enforcement.

Recognizing the centrality of these questions, the second Task Force roundtable (held on April 11) was titled “Between a Block and a Hard Place: Tailoring Regulation for Crypto Trading.” Perhaps the most significant takeaway from the discussion was then-Acting Chair Mark Uyeda’s statement expressing openness to a temporary solution—in SEC-speak “conditional exemptive relief framework”—that would give the SEC some authority to oversee crypto trading activity while more permanent legal structures are under construction. We should have a good sense in the coming weeks and months whether Chair Atkins also supports this approach.

What’s Next and Implications for Crypto Companies

Green shoots continue to emerge from the SEC’s crypto spring. 
The Task Force has scheduled/completed the following roundtables:

Despite the sweet smell of regulatory flowers beginning to bloom, however, it will be some time before there is a firm and settled legal framework for the United States crypto industry. In this environment, insurance carriers will continue to raise questions about the business models of crypto industry participants, with concerns about anti-money laundering/know your customer (AML/KYC) and private litigation risks front and center. In a moment of significantly reduced regulatory risk, insurance advisors should be advocating for responsible crypto businesses to obtain improved coverage terms and pricing. To make sure you are getting the best risk management solutions, work with advisors who really understand your business model and can explain why you are a good risk for insurance carriers to take.