Trump Won and the United States Is Ready for Sensible Crypto Regulation. How Do We Get There?

For years, the crypto industry hit a brick wall trying to offer products in compliance with U.S. law. Put simply, if the law requires a crypto product offering to be registered as a security, compliance is either impossible or impracticable because existing regulations do not contemplate businesses run on a distributed ledger. Reasonable regulatory oversight will promote broader adoption and stability while rationally mitigating the risks of fraudulent and harmful conduct. The Trump administration has promised to deliver crypto-friendly regulation. This article describes steps taken by the administration (and U.S. Congress) to make this happen.

The White House Appointed a Crypto Tzar To Set Policy and Address the Framework
On January 23, 2025, the Trump administration issued the “Strengthening American Leadership in Digital Financial Technology” executive order, which outlines the president’s support for “responsible growth and use of digital assets, blockchain technology and related technologies across all sectors of the economy.” [1] The Digital Asset EO established a working group on digital assets comprised of a special advisor for AI and crypto and several agency heads (including the chairs of the Securities and Exchange Commission (SEC) and the Commodity Trading Futures Commission (CFTC)). This working group is tasked with proposing a regulatory framework for governing the issuance and operation of digital assets in the U.S. and evaluating the viability of creating and maintaining a digital asset reserve.

The Crypto Task Force and Questions Posed by SEC Commissioner Peirce
In addition, the SEC has established its own Crypto Task Force to collaborate with SEC staff and receive input from the public regarding how to distinguish securities from non-securities, craft disclosure frameworks, and provide paths for registration of crypto assets and market intermediaries, where necessary. The task force includes issuers, protocol developers, DeFi lending and staking platforms, exchanges, wallet and custody solutions, investment advisors, and others. On February 21, 2025, SEC Commissioner Hester M. Peirce sought public input on 48 questions pertinent to digital assets that are securities—either intrinsically, as offered, or from tokenization (topics include security status, trading, custody, lending, and tokenization).

CFTC Engagement
The CFTC is also engaging in efforts to shape its oversight of crypto and held a CEO Forum on February 7, 2025, to discuss the launch of its digital asset markets pilot program for tokenized non-cash collateral. Participants included Circle, Coinbase, Crypto.com, MoonPay, and Ripple.

Legislative Efforts in Congress
In the 2024 legislative session, the Financial Innovation and Technology for the 21st Century Act (FIT21), passed by the U.S. House of Representatives on May 22, 2024, sought to establish a regulatory framework in which the CFTC would regulate digital assets that operated on a decentralized functional blockchain and the SEC would regulate functional digital assets on blockchains that had not achieved decentralization. This bill was never presented to the Senate, and its future remains uncertain.

In the current 2025 legislative session, two bills address payment stablecoins:

• The House’s Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025, or STABLE Act, would give the U.S. Office of the Comptroller of the Currency (OCC) authority to approve and supervise federally qualified nonbank payment stablecoin issuers, and

• The Senate’s Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025, or GENIUS Act, would clarify that stablecoins are not securities or commodities and establish a licensing and regulatory framework for permitted issuers of payment stablecoins at the federal and state levels. States would oversee stablecoin issuers with a market capitalization of under 10 billion USD, and the Federal Reserve and OCC would oversee the remaining stablecoin issuers.

These pending bills await further action in both houses before a bill can be presented to President Trump for signature.

Federal Courts Continue To Interpret the Law Governing Digital Assets While the Regulation of Digital Assets Remains Uncertain
The work of U.S. federal courts is often overlooked in discussions about establishing coherent U.S. law on crypto topics. Federal courts settle disputes as to the interpretation of pertinent law and have continued to establish important guideposts where private plaintiffs have sought to enforce the securities laws against digital asset companies. Federal court interpretations of the securities laws will assist industry participants and their service providers (legal counsel, accountants, and other advisors) in better determining whether crypto assets have been offered as securities.

A recent opinion in Donovan, et al. v. GMO-Z.Com Trust Company, Inc.,[2] is instructive. In Donovan, putative class action plaintiffs purchased GYEN, a stablecoin issued by GMO Trust and pegged one-to-one to the Japanese yen (JPY). The value of GYEN became untethered from the value of the JPY, causing financial harm to GYEN holders. Plaintiffs allege that GMO Trust violated Section 5 of the Securities Act of 1933 by issuing GYEN without registering it as a security. The decision issued in Donovan notes that plaintiffs must allege an investment contract form of security, which requires “an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”[3]

The court distinguished tokens that are offered as securities from the tokens themselves.[4] Thus, the court found plaintiffs must plead a “contract, transaction or scheme” through which GYEN, as the subject of the arrangement, exchanged hands; plaintiffs’ programmatic purchases of GYEN on third-party exchanges were not investment contracts.[5] The court also found a token “advertised as holding a ‘stable’ value is not a security.”[6] The court explained that purchasers of GYEN “could not . . . reasonably expect to earn a profit derived primarily from entrepreneurial or managerial efforts of GMO Trust” or any other promoters. The court dismissed plaintiffs’ Securities Act claim but did not dismiss claims under broadly worded New York and California state consumer protection laws because the pleading standard had been met (the state law claims will be fully litigated).

There are three important takeaways from Donovan: (1) determining the existence of an investment contract form of security requires a determination that the asset was offered in a manner such that the purchaser had a reasonable expectation of profit from the efforts of the issuer or promoters; (2) stablecoins that have a value pegged one-to-one to a fiat currency are not securities; and (3) issuers of digital assets should beware of potential liability under broadly framed state consumer protection laws.

What Does This Mean?
The past four years of U.S. regulation by enforcement have stifled the development of the U.S. crypto industry and frustrated advisors who tried to assist crypto companies in offering their products in the U.S. The Trump administration has taken the steps described above to tackle the problem, but companies operating in this space will continue to face uncertainty until further issuance of guidance, codification of binding laws and regulations, and U.S. courts settle pending legal disputes. Expeditious action toward workable (if not perfect) laws and rules is still needed to turn the current momentum into lasting change and long-term security for the crypto industry.

[1]Strengthening American Leadership in Digital Financial Technology – The White House (“Digital Asset EO”).

[2] 23 Civ. 8431 (February 17, 2025).

[3] SEC v. Edwards, 540 US 389, 395 (2004), citing SEC v. W. J. Howey Co., 328 US 293, 297 (1946).

[4] SEC v. Binance Holdings Ltd., 738 F. Supp. 3d 20, 43 (D.D.C. 2024).

[5] See, e.g., SEC v. Ripple Labs, Inc., 682 F. Supp. 3d 308, 323-326 (S.D.N.Y. 1923) (observing anything of value may be sold via an investment contract “depending on the circumstances of [their] sales” and distinguishing direct sales of XRP to institutions (investment contracts) from programmatic sales of XRP on crypto exchanges); SEC v. Coinbase, Inc., 726, F. Supp. 3d 260, 292-93 (S.D.N.Y. 2024) (addressing allegations of several token offerings where issuer statements gave purchasers a reasonable expectation of profit); see also Binance, 738 F. Supp. 3d 43-44 (“Obviously, [citrus] groves are not securities, yet the seminal case on this point found the set of contracts and expectations surrounding their sale to be an investment contract for purposes of the Act.”).

[6] Quoting SEC v. Terraform Labs Pte. Ltd., 684 F. Supp. 3d 170, 194 (S.D.N.Y. 2023).

About the Author
Article authored by James Q. Walker, Partner at Perkins Coie