Happy Hanukah Courtesy Nano Banana Pro

 

This week:

• The SEC Pivot: Enforcement freezes and ICOs move toward CFTC jurisdiction.
• Institutional Rails: DTCC tokenization pilot and OCC bank charters.
• New York enacts AI deepfake laws.

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Federal Policy: The Great De-Escalation

• Chair Atkins signals major jurisdictional transfer for ICOs. Paul Atkins stated that most Initial Coin Offerings (specifically those involving network tokens and digital collectibles) should fall under CFTC oversight rather than securities regulation. Speaking at the Blockchain Association summit, in response to a question from Decrypt, Atkins outlined a taxonomy that reserves SEC purview strictly for tokenized securities, aligning with the agency’s upcoming “Project Crypto” initiative. [Decrypt]
• SEC enforcement grinds to a halt under new administration dynamics. A New York Times analysis reveals the SEC has initiated zero new federal court actions as of late 2025. The agency has concurrently pulled back on 61% of inherited crypto-related matters, particularly those involving issuers and exchanges, signaling a profound shift in compliance strategy for the digital asset sector. What the industry would call a hard-fought policy win, the NYT implies is the result of improper presidential influence. [New York Times gift link]
• In her final remarks, outgoing SEC Commissioner Caroline Crenshaw criticized the agency’s softening stance, and issued parting warning on market risks, warning that reduced penalties and dismissed cases are turning markets into “casinos.” Crenshaw expresses concern that creating regulatory carve-outs for crypto firms will bypass essential securities guardrails and risk contagion. [SEC Newsroom]

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Market Structure: The Institutional Rails Open Up

• DTCC launches pilot to tokenize ETFs and Treasury securities. The SEC has issued a no-action letter allowing the Depository Trust & Clearing Corporation (DTCC) to test tokenized versions of highly liquid U.S. securities on blockchains. A proposed three-year pilot will ensure tokenized assets retain identical rights to traditional securities, a massive step toward integrating blockchain into national settlement infrastructure. [SEC No Action Letter] [The Defiant]
• OCC grants federal charters to five major crypto firms. The Office of the Comptroller of the Currency has issued conditional national trust bank approvals to Ripple, Circle, Fidelity Digital Assets, BitGo, and Paxos. This allows these firms to provide nationwide fiduciary services under federal oversight, bypassing the patchwork of state-level money transmitter licenses. [Bloomberg]
• CFTC makes a series of announcements, including: [1] the withdrawal of outdated digital assets guidance [CFTC Press Release and Link to Federal Register]; [2] the approval of tokenized collateral for derivatives trading, including a pilot program permitting the use of Bitcoin, Ether, and USDC as collateral for futures and swaps. [CoinDesk]; and [3] issuing a no action letter to Small Exchange, an events contract futures exchange now owned by Kraken. [No Action Letter]
• The OCC confirmed via interpretive letter that national banks can act as intermediaries for “riskless” crypto transactions, buying and selling simultaneously without holding inventory. This guidance extends to non-security digital assets, framing crypto intermediation as a core banking activity. [Bitcoin Magazine] [OCC Interpretive Letter # 1188]
• Wyoming launches “Frontier” stablecoin. Relying on state statutes and the U.S. Constitution, Wyoming is moving forward with its own state-issued stablecoin despite stalled federal legislation. State regulators have designed the “Frontier Token” to withstand federal preemption challenges, setting a new precedent for state-led financial innovation. [Law360, quoting Debra Brookes, Esq., CCAS]

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AI & Consumer Protection

• New York governor Kathy Hochul has signed legislation requiring clear disclosures for AI-generated performers in advertising and mandating consent for using the likeness of deceased individuals. The law targets deepfakes and aims to protect consumer trust, creating new compliance obligations for advertisers using AI digital avatars. [The Verge]
• Legislation S.8420-A/A.8887-B requires persons who produce or create an advertisement to identify if it includes AI generated synthetic performers. [Assembly Bill A8887B]
• Legislation S.8391/A.8882 requires consent from heirs or executors if a person wishes to use the name, image, or likeness of an individual for commercial purposes after their death. [Assembly Bill A8882]

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Why It Matters

The pendulum swings: We are seeing a historic decoupling of regulatory approaches. Federal regulators (SEC, CFTC, and OCC) are rapidly moving toward accommodation and integration of digital assets, while State regulators (Arizona, NY, MA) are becoming the new aggressive enforcers in gambling and consumer protection.

Happy Hannukah to all that celebrate!

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Block & Order Weekly Docket is curated for in-house counsel, compliance professionals, and legal practitioners navigating digital assets and emerging technology. The materials in this article are for informational purposes only and are not legal advice. Do not act upon this information without first seeking advice from an attorney licensed in your jurisdiction.