Welcome to edition #21 of the Web3Blast!
This week’s newsletter focuses on major regulatory shifts, particularly in the U.S., alongside significant updates from Europe’s MiCA rollout and evolving policies in India.
Here’s a quick rundown of the top stories:
- SEC crypto enforcement unit sees cuts amid regulatory rethink
- India cracks down on crypto tax evasion with 70% penalty
- MiCA spurs stablecoins delisting across major exchanges
- Pump.fun faces lawsuit claiming all memecoins are securities
This newsletter is brought to you by Legal Nodes, a legal platform that helps tech and Web3 businesses create global legal structures and stay compliant with regulations as their business grows.
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Disclaimer: none of the information shared in the newsletter should be considered legal, investment, tax, or any other kind of advice.
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Now, without any further ado, let's dive into this edition!
Regulatory updates
🇺🇸 SEC crypto enforcement unit sees cuts amid regulatory rethink
The SEC is scaling back its specialized crypto enforcement unit, which previously consisted of over 50 lawyers and staff members. This move aligns with President Trump’s executive order aimed at promoting cryptocurrency growth and reducing regulatory overreach. The downsizing reflects a shift in regulatory approach under the new administration, with Acting SEC Chair Mark Uyeda establishing a task force led by Commissioner Hester Peirce to re-evaluate the SEC’s stance on digital assets. At this stage, the impact of this upon ongoing enforcement actions—like the SEC’s case against Coinbase—is unclear.
🇺🇸 New SEC Crypto Task Force unveils big plans for digital asset regulation
The SEC’s Crypto Task Force, led by Commissioner Hester Peirce, is considering “temporary prospective and retroactive relief” for certain coin or token offerings, potentially reclassifying some crypto assets as non-securities. This move aims to provide regulatory clarity and foster innovation while protecting investors in the crypto sector. The Task Force—which was launched on January 21, 2025, the day after Gary Gensler resigned as SEC Chair—is examining different types of crypto assets to determine their status under securities laws. It welcomes requests for no-action letters to help identify areas outside the SEC’s jurisdiction. In a statement published on February 4, 2025, Pierce stated the Task Force is also exploring modifications to existing registration paths, such as Regulation A and crowdfunding, to make token offerings more viable. Additionally, it considers cross-border experimentation through a sandbox approach to facilitate international crypto projects.
🇺🇸 CFTC shifts gears, ending “regulation by enforcement” approach
The Commodity Futures Trading Commission (CFTC) is also undergoing significant changes under the Trump administration. Acting Chair Caroline Pham announced on February 4, 2025, that the agency would be winding down its practice of regulation by enforcement, likely impacting its approach to regulating crypto firms and activities. The CFTC is restructuring its Division of Enforcement into two task forces focused on “complex fraud” and retail fraud. This shift aims to enhance the agency’s enforcement program while allowing for more innovation in the crypto space. Additionally, the CFTC announced a Crypto CEO Forum to launch a Digital Asset Markets Pilot, signaling a more proactive engagement with the industry.
“News coming out of the United States seems to signal a complete U-turn on regulatory approach; however, it’s still early days. Whilst the SEC and CFTC are reshuffling their organisations and setting out approaches that appear more “pro-crypto”, there are still legal cases ongoing and lots of much-needed updates to regulation in order to deliver regulatory certainty. Maybe this 2025 will be the year that regulation by enforcement gives way to industry collaboration and regulation that promotes innovation and certainty." - Nestor Dubnevych.
🇺🇸 Senate introduces “GENIUS” Act to regulate stablecoins
Senator Bill Hagerty has introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, aiming to create a regulatory framework for stablecoins pegged to the US dollar. This bill would bring tokens such as Tether and USD Coin under Federal Reserve rules for issuers with market caps above $10 billion, while smaller issuers would be regulated by the states. The GENIUS Act has received bipartisan support and aims to “unleash innovation” and help keep the US as a leader in the crypto space and in global finance.
🇮🇳 India cracks down on crypto tax evasion with 70% penalty
Cryptocurrency traders in India now face significantly increased tax scrutiny and penalties. As part of the Union Budget 2025, the Indian government will impose a steep 70% tax penalty on undisclosed crypto gains, retroactively effective from February 1, 2025. This move brings cryptocurrencies under the Income Tax Act, treating them similarly to traditional assets for tax purposes. Whilst these measures aim to increase transparency and compliance in India’s crypto sector, by aligning with global trends in cryptocurrency taxation, they may pose challenges for crypto traders and investors in India, potentially impacting the country’s digital asset ecosystem.
MiCA & licensing
🇪🇺 MiCA spurs stablecoins delisting across major exchanges
The European Union’s Markets in Crypto-Assets (MiCA) regulation has prompted the delisting of several non-compliant stablecoins from major exchanges in the European Economic Area (EEA). Kraken is set to phase out Tether (USDT), PayPal USD (PYUSD), Euro Tether (EURT), TrueUSD (TUSD), and TerraClassicUSD (UST) by March 31, 2025, to align with MiCA requirements. Similarly, Crypto.com is delisting ten tokens, including USDT, Wrapped Bitcoin (WBTC), Crypto.com Staked ETH (CDCETH), and Crypto.com Staked SOL (CDCSOL). Coinbase has also removed six stablecoins, such as Paxos Standard (PAX), PYUSD, and Gemini Dollar (GUSD).
These actions are part of a broader effort to ensure stablecoin issuers meet MiCA’s stringent requirements, including proper authorization and sufficient liquid reserves. Exchanges have until March 31, 2025, to comply, with non-compliant assets being automatically converted to alternatives where applicable.
“There are questions about the legal basis for ESMA labeling some stablecoins as ‘non-compliant ARTs and EMTs.’ However, legal interpretations suggest that stablecoins whose issuers are not conducting public offerings or seeking formal admission to trading can still be listed if trading platforms take the initiative. CASPs can also offer services for these stablecoins as long as issuers do not actively pursue public offerings. This approach enables access to such assets without requiring issuers to meet stricter regulatory obligations tied to public offerings or formal trading admissions.” - Nestor Dubnevych.
💡 For further insights, Jonathan Galea’s legal opinion explores how these rules impact stablecoin listings and services.
Major players obtaining MiCA licenses
🇲🇹 OKX and Crypto.com secure full MiCA licenses via Malta
OKX and Crypto.com have achieved a major milestone by securing full licenses under the European Union’s Markets in Crypto-Assets Regulation (MiCA). Announced on January 27, 2025, the licenses were granted by the Malta Financial Services Authority (MFSA) and enable both exchanges to offer regulated crypto services across all 30 European Economic Area (EEA) member states. Leveraging MiCA’s “passporting” feature, OKX plans to provide OTC, spot, and bot trading services, while Crypto.com will offer a wide range of crypto-related services.
🇪🇺 Bitpanda secures MiCA license in Germany 🇩🇪
Austrian fintech unicorn Bitpanda has obtained a MiCA license from Germany’s Federal Financial Supervisory Authority (BaFin), becoming the second crypto asset service provider to do so. The license, effective immediately, enables Bitpanda to operate across all 27 European Union member states under a unified regulatory framework.
🇺🇸 Ripple gains key US licenses in Texas and New York
Ripple Labs has secured Money Transmitter Licenses (MTLs) in Texas and New York, increasing its total to over 55 across various jurisdictions. These licenses will allow Ripple to offer regulated cross-border payment solutions in key U.S. states known for their stringent regulatory standards. This move strengthens Ripple’s position in the US, particularly in Texas, a hub for cryptocurrency mining, and New York, a global financial center, and aligns with Ripple’s broader strategy of global growth, as it continues expanding its presence in over 90 markets worldwide.
🇭🇰 Hong Kong SFC issues first crypto licenses of 2025
Hong Kong’s Securities and Futures Commission (SFC) granted its first crypto trading platform licenses of 2025 to PantherTrade and YAX on January 27, 2025. This brings the total number of licensed virtual asset trading platforms (VATPs) to seven since the SFC began its licensing initiative in mid-2024. The SFC has approved only four cryptocurrencies for trading in Hong Kong: Bitcoin, Ether, Avalanche, and Chainlink. Hong Kong is aiming to position itself as a leading hub for digital assets in Asia, and wants to strike a balance between investor protection and the continuous development of Hong Kong’s virtual asset ecosystem.
Legal Cases
🇺🇸 Pump.fun faces a lawsuit over memecoin losses
Burwick Law, a US crypto law firm, had filed a class-action lawsuit against Pump.fun alleging investor exploitation and misconduct. Citing significant financial losses and questionable content on the platform, the firm aims to represent investors who have suffered due to rug pulls and unfulfilled promises. This action follows the UK’s ban of Pump.fun and raises questions about the platform’s role in the volatile memecoin market.
Read this tweet for an interesting perspective on the Burwick class-action complaint:
🇺🇸 Pump.fun faces additional lawsuit claiming all memecoins are securities
A class-action lawsuit filed on January 30 in New York federal court accuses Solana-based memecoin platform Pump.fun of selling unregistered securities, earning nearly $500 million in fees. The suit, led by plaintiff Diego Aguilar, alleges that all tokens created on Pump.fun qualify as securities and claims the platform orchestrated “pump-and-dump” schemes with influencers. Aguilar seeks damages for investor losses and the rescission of all token purchases. The lawsuit also names Baton Corporation, Pump.fun’s alleged UK-based operator, and its executives as defendants.
⚖️ SEC sues Helium creator Nova Labs in Gensler’s final act
Gary Gensler ended his tenure as SEC Chair with a lawsuit against Nova Labs, the company behind the Helium Network. Filed on January 17, the suit accuses Nova Labs of selling unregistered securities through its “Hotspots” devices and “Discovery Mapping” program, which rewarded users with tokens for sharing data. The SEC also alleges that Nova Labs misled investors by falsely claiming partnerships with companies like Nestlé, Salesforce, and Lime, which later issued cease-and-desist letters. Helium CEO Amir Haleem has denied the allegations, calling them baseless and harmful to blockchain innovation. The lawsuit seeks financial penalties and a permanent ban on Nova Labs offering unregistered securities.
🇫🇷 Binance faces French probe over alleged money laundering and fraud
French prosecutors have launched an investigation into Binance, scrutinizing the exchange’s activities between 2019 and 2024 for alleged money laundering and tax fraud, potentially linked to drug trafficking. This probe adds to Binance’s mounting global legal challenges, including a $4.3 billion fine in the US and ongoing scrutiny in Australia. Previously, founder Changpeng “CZ” Zhao served a four-month prison sentence in the US for enabling money laundering. Binance denies the latest allegations from the French authorities.
New from Legal Nodes!
Check out our latest legal playbooks for web3 projects:
- Legal Liability of Front-End Operators in Decentralized Projects: A Definitive Guide
- Decentralized AI Projects and AI Node Sale: Legal Structuring Considerations
- Advertising Policies for Crypto Products by Ad Platforms: Google, Meta & X (Twitter)
That’s all for this edition of the Web3Blast. We hope you’ve enjoyed it and found it useful. If you have any feedback you’d like to share, message us on X.
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Disclaimer: the information in this newsletter is provided for informational purposes only. You should not construe any such information as legal, tax, investment, trading, financial, or other advice.
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The Legal Nodes Team
