Welcome to edition #22 of the Web3Blast!

This week’s newsletter focuses mainly on the U.S., where huge political and regulatory shifts are seeing a completely new approach towards crypto regulation. We also check-in on MiCA updates and the latest big legal cases.

Here’s a quick rundown of the top stories:

• SEC drops 7 cases, including Coinbase, Kraken and Gemini
• ESMA tightens MiCA reverse solicitation rules
• New bill on memecoins introduced as SEC says they aren’t securities
• U.S. states race to pass laws on bitcoin reserves

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.

New here? Not subscribed yet? ​Sign up to get these monthly Web3 updates​.

Disclaimer: none of the information shared in the newsletter should be considered legal, investment, tax, or any other kind of advice.

Regulatory updates

🇪🇺 ESMA narrows MiCA’s reverse solicitation exemption rules

ESMA has issued ​strict guidelines​ on reverse solicitation under MiCA, recommending that third-country firms avoid accepting new EU client accounts and implement geo-blocking measures. These guidelines narrowly interpret the reverse solicitation exemption, aiming to prevent circumvention of MiCA’s authorization requirements. Web3 legal businesses should be cautious, as these interpretations significantly limit non-EU crypto service providers’ ability to engage with EU clients. ​Some critics​ argue that ESMA’s approach exceeds MiCA’s Article 61 intent, potentially nullifying the reverse solicitation exemption and unduly restricting EU citizens’ access to global crypto services.

🇪🇺 Delisting of non-compliant stablecoins continues

​Binance will delist nine non-MiCA-compliant stablecoins​, including USDT and DAI, for European Economic Area (EEA) users by March 31, 2025, to align with the EU’s MiCA regulations. While custody, deposits, and withdrawals will still be supported, trading pairs involving these stablecoins will no longer be available. This move pressures Web3 businesses to transition to MiCA-compliant assets like USDC or Eurite (EURI), potentially disrupting operations reliant on delisted tokens. Critics argue that such stringent measures could stifle innovation and limit user choice in Europe’s crypto market, as MiCA compliance remains a significant hurdle for many stablecoin issuers.

Read our ​guide on stablecoin regulation in 2025​.

🇺🇸 SEC’s new Crypto Task Force plans roundtable on crypto security

The SEC’s Crypto Task Force is initiating a “​Spring Sprint Toward Crypto Clarity​,” starting with a roundtable on March 21 to define the “security status” of digital assets. This marks a potential shift towards collaborative regulation, engaging industry experts to develop a workable crypto framework. For Web3 businesses, this signals a move towards reduced regulatory uncertainty and clearer operational guidelines. However, businesses should closely monitor these discussions, as outcomes could significantly impact how digital assets are classified and regulated.

🇺🇸 SEC says memecoins aren’t securities as draft bill aims to ban memecoin issuance by politicians

The SEC’s Division of Corporation Finance has ​issued a statement​ declaring that memecoins are not considered securities under federal law, exempting them from registration requirements. The decision aligns with President Trump’s campaign promise to reduce regulatory oversight in the crypto space. While memecoin buyers and holders won’t be protected by U.S. securities laws, the SEC warned that fraudulent activities related to memecoins could still face enforcement actions from other federal or state agencies.

In response to the memecoin phenomenon, House Democrats are preparing to introduce the ​Modern Emoluments and Malfeasance Enforcement (MEME) Act​, which aims to prohibit public officials from profiting from digital assets. The proposed legislation would ban a wide range of public officials, including the president and members of Congress, from issuing, sponsoring, or endorsing any security, commodity, or digital asset. This bill comes in the wake of President Trump and First Lady Melania Trump launching their own memecoins, which have since experienced significant price drops, raising concerns about potential exploitation of public office for personal gain.

👉 Worth checking: our guide on legal considerations for memecoin launches

🇦🇪 Bybit’s rollercoaster of license approvals and a $1.5 b hack

Bybit has ​secured in-principle approval​ from the UAE’s Securities and Commodities Authority to establish a virtual asset platform on February 18, 2025, just days before suffering a hack on February 21. This approval is a significant step towards obtaining a full operational license in the UAE, allowing Bybit to offer digital asset services to retail and institutional clients. Bybit’s global expansion highlights a fragmented approach as it secures regulatory approvals in regions like the UAE, India, Georgia, Kazakhstan, and Turkey while facing significant challenges elsewhere.

The Bybit hack, attributed to North Korea’s Lazarus Group, resulted in a staggering $1.5 billion theft, marking one of the largest cryptocurrency heists in history. The attackers exploited vulnerabilities in the exchange’s cold wallet infrastructure through sophisticated manipulation of the transaction signing process. In response, Bybit swiftly implemented emergency measures, including securing liquidity, strengthening security protocols, and launching a $140 million bounty program to recover stolen funds.

“This incident underscores the critical importance of robust security measures and regulatory compliance for cryptocurrency exchanges and Web3 businesses. Notably, Bybit’s regular Proof of Reserves audits, conducted by ​our partners at Hacken​, played a crucial role in maintaining user trust and preventing a market-wide panic in the aftermath of the hack.” - Nestor Dubnevych, Head of Web3 Legal @ Legal Nodes

🇺🇸 Utah, Oklahoma and Arizona lead state Bitcoin reserve race

​Oklahoma’s​ Strategic Bitcoin Reserve Act has passed the House Committee, moving closer to potentially allowing the state to invest up to 10% of its public funds in Bitcoin and other qualifying digital assets. The bill aims to hedge against inflation and promote financial freedom. ​Arizona​ is also actively advancing two Bitcoin reserve bills, which have passed the Senate and are moving to the House for further consideration. Arizona and Utah are currently leading the push for crypto reserve legislation. However, the momentum for similar bills has slowed across the United States, with five states—​Montana​, North Dakota, Pennsylvania, ​South Dakota​, and Wyoming—rejecting or effectively killing their Bitcoin reserve proposals. Critics in these states cite concerns over the volatility of cryptocurrencies and the risks associated with investing taxpayer money in digital assets. Despite these setbacks, 18 other states still have pending crypto reserve bills, highlighting the ongoing debate over Bitcoin’s role in state finances.

Legal Cases

🇺🇸 SEC shifts gears, dismisses huge cases amid regulatory overhaul

​Coinbase​ case dismissed

The SEC has voluntarily dismissed its lawsuit against Coinbase with prejudice, ending the case permanently. Previously, the SEC had alleged Coinbase operated as an unregistered securities exchange, broker, and clearing agency, which could have resulted in significant fines and operational changes for the company.

​Tron​ case paused

The SEC and Justin Sun, representing Tron-related entities, jointly requested a stay in their legal case to explore a potential resolution. Before this, the SEC had accused Sun of selling unregistered securities and engaging in market manipulation, which could have resulted in severe penalties for Sun and Tron-related projects.

​Gemini​ investigation closed

The SEC has closed its investigation into Gemini without recommending enforcement action. Previously, the SEC had charged Gemini with offering unregistered securities through its “Earn” program, which could have resulted in significant penalties and operational restrictions.

​Kraken​ lawsuit dismissed

The SEC has dropped its lawsuit against Kraken, which had accused the exchange of operating as an unregistered broker, dealer, exchange, and clearing agency. Previously, the SEC alleged Kraken commingled customer funds and sought penalties that could have significantly disrupted its operations.

​OpenSea​ investigation closed

The SEC has concluded its investigation into OpenSea without pursuing charges over NFT marketplace operations. Previously, the SEC had issued a Wells notice to OpenSea in August 2024, signaling potential enforcement actions for allegedly operating as an unregistered securities marketplace.

​Robinhood​ investigation closed

The SEC has ended its investigation into Robinhood Crypto without pursuing enforcement action. Previously, the inquiry focused on Robinhood’s crypto trading practices under a framework that treated most digital assets as securities, potentially leading to significant fines or operational restrictions.

​Uniswap​ investigation closed

The SEC has dropped its investigation into Uniswap Labs without filing any enforcement charges. Previously, the SEC had issued a Wells notice in April 2024, accusing Uniswap of operating as an unregistered securities broker and exchange, and issuing an unregistered security.

“After years of heavy enforcement from the SEC, this flood of case dismissals and pauses, all of which include no admission of wrongdoing or penalties, marks a turning point in the regulatory approach of the U.S. We seem to be saying goodbye to “regulation by enforcement” and welcoming a much more favorable environment for crypto businesses. However, it’s still early to safely say that crypto projects can operate without any precautions from the US, as more clear regulations will come no earlier than the end of 2025, with more time required for the implementation of new regulations.” - Nestor Dubnevych, Head of Web3 Legal @ Legal Nodes

🇺🇸 OKX settles with DOJ for $505 million over unlicensed operations

Cryptocurrency exchange OKX has ​pleaded guilty​ to operating an unlicensed money-transmitting business in violation of US Anti-Money Laundering laws, agreeing to pay over $500 million in fines and forfeited fees. The violations occurred between 2018 and early 2024, during which OKX knowingly served US customers despite having a policy prohibiting US persons from using its platform. This case highlights the critical importance of regulatory compliance for Web3 businesses operating globally, demonstrating that even companies based outside the US can face severe consequences for violating US laws when serving US customers.

New from Legal Nodes!

Watch Vincent de Vos of Chainforce chat with Nestor Dubneyvch of Legal Nodes on some of the biggest mistakes founders make pre-TGE in tokenomics legal compliance, including:

• Overlooking multi-layered utility design
• Not considering unlocks at TGE
• Having unbalanced token allocations
• Not implementing geofencing, AML & KYT checks

Watch the full video on YouTube now: ​Biggest Mistakes Founders Make Pre-TGE in Tokenomics & Legal Compliance (Legal Nodes & Chainforce)​

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, you can let us know by ​dropping us a message on X​.

Talk to us

If you’d like to talk to Legal Nodes about the legal tasks of your Web3 project, get started by ​filling out this short form​. You’ll be able to share your Web3 project goals with us and we’ll help you understand the legal options available to you on our platform.

If you’ve received this email from someone you can ​subscribe here​ to receive monthly updates like this one in your inbox.

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.

Thanks and see you next time!

The Legal Nodes Team