Blockchain and Digital Assets News and Trends – Q1 2026

This periodic bulletin is designed to help companies identify important legal developments governing the use and acceptance of blockchain technology, smart contracts, and digital assets.

While the use cases for blockchain technology are vast, this bulletin focuses on uses of blockchain and smart contracts in the financial services sector. With respect to digital assets, we have organized our approach to this topic by discussing them in terms of traditional asset type or function (although the types and functions may overlap) – that is, digital assets as:

• Securities
• Virtual currencies
• Commodities
• Deposits, accounts, intangibles
• Negotiable instruments
• Electronic chattel paper
• Digitized assets

In addition to reporting on the law and regulation governing blockchain, smart contracts, and digital assets, this bulletin will discuss the legal developments supporting the infrastructure and ecosystems that enable the use and acceptance of these new technologies.

INSIGHTS

SEC and CFTC issue interpretive release on crypto: Top points

By: Josh Kaufman, Era Anagnosti, and Kristin Boggiano

The United States Securities and Exchange Commission (SEC) has issued an interpretive release on how federal securities laws apply to crypto assets and related transactions. The Commodity Futures Trading Commission (CFTC) indicated it will administer the Commodity Exchange Act consistent with the SEC’s interpretation.

Read our summary of the SEC’s framework and highlights of its discussion of the treatment of protocol mining and staking, wrapping structures, and certain covered airdrops under federal securities laws.

Treasury proposes anti-money laundering, countering the financing of terrorism, and sanctions compliance rules for stablecoin issuers under the GENIUS Act 

By: David Stier, Melanie Garcia, Christian Ford, Dillon Guthrie, and Eric Hall

On April 10, 2026, the US Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) published a joint notice of proposed rulemaking that would implement the anti-money laundering (AML), countering the financing of terrorism, and sanctions compliance provisions of the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act). 

Read our summary of the key elements of FinCEN and OFAC's proposed rulemaking under the GENIUS Act and discussion of its practical implications for stablecoin issuers and the broader digital asset industry.

STATUTORY AND AGENCY DEVELOPMENTS

FEDERAL DEVELOPMENTS

SEC

• SEC announces fiscal year 2025 enforcement results, reflecting crypto policy shift. On April 7, 2026, the SEC announced its enforcement results for fiscal year 2025, reporting 456 enforcement actions and orders for monetary relief totaling USD17.9 billion. The SEC noted a significant course correction in its approach to crypto assets, having dismissed seven enforcement actions brought by the prior administration against crypto firms, including cases against Binance, Cumberland DRW, Consensys, Payward (Kraken), Dragonchain, and Balina. The SEC emphasized that going forward it will prioritize “fraud in its many forms” rather than pursuing registration-based actions against crypto firms.


• SEC issues broker-dealer registration exception for crypto user interfaces. On April 13, 2026, the SEC's Division of Trading and Markets issued a staff statement providing that it would not object to certain technology providers – referred to as "Covered User Interface Providers" – creating and operating software interfaces that allow users to prepare and submit transactions in crypto asset securities without registering as broker-dealers. A “Covered User Interface” is an interface provided by a website, browser extension, or other software application (e.g., mobile application) that may be embedded in a wallet or separately available for download, designed to assist users engaging in user-initiated crypto asset securities transactions on blockchain protocols (or blockchain-based smart contracts) utilizing the user’s self-custodial wallet. The statement permits such providers to receive either a flat fee or transaction-based compensation from users, while prohibiting activities such as making recommendations, soliciting transactions, handling orders or assets, or receiving payment for order flow. The statement is described as an "interim step" and will be withdrawn in five years absent further Commission action.

CFTC

• CFTC issues no-action letter on digital assets as margin collateral. On February 6, 2026, the CFTC's Market Participants Division issued No-Action Letter 26-05 in response to a request from Coinbase Financial Markets, Inc., establishing a framework under which futures commission merchants (FCMs) may accept payment stablecoins, Bitcoin, Ether, and other non-securities digital assets as customer margin collateral for derivatives transactions. The letter provides that FCMs may also deposit their own payment stablecoins into segregated customer accounts as residual interest, subject to applicable capital charges. The CFTC stated that the no-action position is intended to address the lack of regulatory clarity that has prevented the benefits of digital asset collateral from being realized in US derivatives markets.


• CFTC publishes FAQs on registrant activities relating to crypto assets and blockchain. On March 20, 2026, the CFTC’s Market Participants Division and Division of Clearing and Risk published FAQs providing further clarity on topics addressed in the CFTC’s tokenized collateral guidance (Staff Letter 25-39) and the no-action position on digital assets accepted as margin collateral (Staff Letter 26-05, referenced above). Among other things, the FAQs clarify that FCMs may accept non-securities crypto assets as margin deposits subject to applicable haircuts; that FCMs may deposit proprietary stablecoins as residual interest, subject to a capital charge of at least two percent; and that swap dealers may exchange tokenized versions of eligible collateral assets for uncleared swaps if they grant effectively the same rights to the holder.


• SEC and CFTC sign memorandum of understanding on regulatory harmonization. On March 11, 2026, the SEC and CFTC entered into a new memorandum of understanding (MOU) establishing a formal framework for coordinated oversight, joint interpretations, and aligned enforcement across areas of overlapping jurisdiction, with a particular focus on digital assets. The MOU preceded the landmark joint interpretation issued on March 17 and signals the agencies' intent to continue coordinating regulatory approaches to digital asset markets.

Congress

• CLARITY Act advances in the Senate. The Digital Asset Market Clarity Act of 2025 (CLARITY Act), which passed the House on July 17, 2025 by a vote of 294–134, continues to advance in the Senate. On January 12, 2026, the Senate Banking Committee released a 278-page draft addressing SEC-side obligations and broader financial stability, including a provision that would prohibit digital asset service providers from offering interest or yield to users solely for holding stablecoin balances. On January 21, 2026, the Senate Agriculture Committee published a draft version of the Digital Commodity Intermediaries Act, which advanced out of committee on January 29, 2026. The two committee drafts must be reconciled and merged before a full Senate vote, and any Senate-approved bill must then be reconciled with the House version. As of publication, the bill remained in the Senate Banking Committee due to disputes over stablecoin yields and decentralized finance (DeFi) regulation, with a markup expected in late April or early May 2026. In the interim, the White House’s Council of Economic Advisors released a report on April 8, 2026 finding that eliminating stablecoin yield would increase bank lending by only USD2.1 billion, or approximately 0.02 percent.


• Proposed PARITY Act discussion draft updated. In March 2026, Representatives Max Miller (R-OH) and Steven Horsford (D-NV) released an updated version of their proposed bill on the taxation of digital assets, the PARITY Act. The release is an update of an earlier discussion draft released in December 2025. While there have been advancements in reporting obligations, various provisions of the US Internal Revenue Code and accompanying Treasury Regulations currently have to be interpreted based on analogous rules and circumstances to provide taxpayers a clear indication of the tax implications of their transactions related to digital assets. The PARITY Act, and accompanying Treasury Regulations, would be a significant development in the taxation of digital assets. Some of the topics covered by the proposed PARITY Act include: taxation on the sale and exchange of stablecoins, exemptions from tax nexus for foreign tax payers, clarification of the application of rules that allow losses on sales of digital assets, and whether the receipt of digital assets through mining and staking would result in immediate or deferred taxable income.

Treasury

• FinCEN and OFAC propose AML/sanctions-compliance rules for stablecoin issuers under the GENIUS Act. FinCEN and OFAC jointly issued a proposed rule to implement provisions of the GENIUS Act. The proposal would treat permitted payment stablecoin issuers (PPSIs) as financial institutions for purposes of the Bank Secrecy Act (BSA) and would impose comprehensive AML and sanctions-compliance obligations. Among other requirements, PPSIs would be required to maintain risk-based AML and sanctions-compliance programs; file suspicious activity reports (SARs), subject to a proposed USD5,000 reporting threshold; conduct enhanced due diligence for higher-risk customers; and have the technical capability to comply with lawful orders to block, freeze, or reject impermissible transactions (including capabilities related to smart contracts, digital wallets, and private keys). Noncompliance could result in penalties of USD100,000 per day. Notably, the proposal marks the first time OFAC has explicitly proposed to require a specific category of financial institutions to maintain an effective sanctions-compliance program. Please see our alert for more detail.


• Treasury issues NPRM on state oversight of stablecoin issuers. Treasury also issued an advance notice of proposed rulemaking (NPRM) addressing the framework for state oversight of stablecoin issuers under the GENIUS Act, which allows "State qualified payment stablecoin issuers" – those with up to USD10 billion in outstanding issuance – to elect state-level supervision.


• FinCEN proposes AML overhaul. On April 7, 2026, FinCEN issued a broad proposed rule outlining significant changes to the AML regulatory framework for a wide range of BSA-covered institutions, including banks, money services businesses, credit card issuers, casinos, and loan and finance companies. The proposal focuses on risk-based program design, greater flexibility in resource allocation, and a new coordination requirement for significant AML-related enforcement actions.


• FinCEN proposes whistleblower program. On March 30, 2026, FinCEN announced its submission of a proposed rule to establish a whistleblower program offering incentives and protections to individuals who report violations of the BSA and related statutes.

OCC

• OCC grants conditional trust bank charters to multiple crypto firms. In December 2025, the Office of the Comptroller of the Currency (OCC) granted conditional approval of five national trust bank charter applications from crypto-focused firms. In February 2026, the OCC issued additional conditional approvals, including for Protego Trust Bank (proposing custody, trading, lending/borrowing, and issuer services platforms related to crypto assets); Foris DAX National Trust Bank (doing business as "Crypto.com National Trust Bank"), which plans to offer digital asset custody, staking services, and customer-directed digital asset exchange services; and Coinbase National Trust Bank, which will provide digital asset custody services in a fiduciary capacity primarily for institutional clients. By early March 2026, 11 companies had filed for, or received, conditional OCC national trust bank charter approvals within an 83-day window.


• OCC finalizes rule on national trust bank activities. On February 27, 2026, the OCC issued a final rule amending its chartering regulation under 12 CFR 5.20 to replace references to "fiduciary activities" with "the operations of a trust company and activities related thereto," aligning the regulatory language with the statutory authority in 12 U.S.C. 27(a). The final rule, effective April 1, 2026, confirms that national trust banks may engage in non-fiduciary activities – in particular, non-fiduciary custody activities – as part of "the operations of a trust company and activities related thereto." The OCC rejected calls for a moratorium on national trust bank applications and stated it would review charter applications on a case-by-case basis.


• OCC proposes GENIUS Act implementation rules. On March 2, 2026, the OCC published a proposed rule to implement the GENIUS Act for stablecoin issuance by entities subject to OCC jurisdiction, including 1:1 reserve requirements, a prohibition on the payment of yield or interest, a 12-month operational backstop requirement, and a two-day redemption requirement.


• FDIC and OCC finalize rule removing reputation risk. On April 7, 2026, the Federal Deposit Insurance Corporation (FDIC) and OCC issued a joint final rule prohibiting the use of reputation risk as a basis for supervisory action, barring regulators from taking adverse action or encouraging institutions to restrict customer relationships based on political, social, or religious views, or other lawful activities.

STATE DEVELOPMENTS

• California DFAL licensing deadline approaches. California's Digital Financial Assets Law (DFAL) licensing requirements are set to take effect on July 1, 2026, at which time digital asset businesses serving California customers must hold a license from the Department of Financial Protection and Innovation (DFPI). The DFPI has proposed a USD20,000 application fee, though pending legislation (AB 236) would cap the fee at USD5,000. In early 2026, the DFPI exercised enforcement authority over crypto-related entities, including actions against cash-to-crypto kiosk operators and crypto-backed lending platform Nexo Capital Inc.


• Virginia enacts framework for unclaimed digital assets. On April 13, 2026, Virginia Governor Abigail Spanberger signed House Bill 798 into law, creating a statutory framework for the treatment and disposition of unclaimed intangible property in the form of digital assets. The law, which takes effect July 1, 2026, provides that cryptocurrency held in customer accounts that show no activity for five years will be presumed abandoned and transferred to state custody. Unlike prior practices in many jurisdictions, the assets must be transferred "in-kind," meaning the state takes possession of the actual tokens rather than converting them into cash upon receipt. Virginia must hold digital assets for at least one year before any liquidation. During that period, owners who come forward can reclaim their property in its original form if it remains unsold, or receive either the sale proceeds or the market value at the time of the claim, whichever is greater. The law defines digital assets as representations of value used as a medium of exchange, unit of account, or store of value, while excluding items such as in-game currencies, non-transferable rewards, and securities registered with or exempt from registration with the SEC. Virginia joins a growing number of states that have moved to update unclaimed property laws to account for digital assets.


• NASAA expresses concerns regarding the CLARITY Act. On January 13, 2026, the North American Securities Administrators Association (NASAA) wrote to express its concerns with the current version of the CLARITY Act, particularly regarding provisions that would preempt state securities and money transmitter laws governing digital assets. Multiple state attorneys general have also raised concerns about federal preemption of state regulatory authority.


• States diverge on crypto enforcement amid federal pullback. As enforcement activity at the federal level – particularly from the CFPB – has scaled back, several states have increased enforcement and regulation in the digital asset space. States including California, Illinois, and New York have continued to press forward with regulatory frameworks and enforcement actions related to digital assets.

INDUSTRY DEVELOPMENTS

• US Department of Labor proposes rule to allow alternative investments in 401(k) plans. On March 30, 2026, the US Department of Labor proposed regulation to expand investment options available in 401(k) plans by allowing fiduciaries to consider alternative assets – including digital assets – through a process-based safe harbor. The proposed rule aims to increase diversification and access for American workers' retirement savings while reducing regulatory burdens and litigation risks for plan managers. The proposal follows executive orders directing agencies to promote broader participation in alternative investments and represents a significant potential shift in institutional demand for digital assets.


• Senate advances CBDC ban attached to bipartisan housing bill. On March 12, 2026, the US Senate passed the 21st Century ROAD to Housing Act by a vote of 89–10, which includes a provision banning the development of an American central bank digital currency (CBDC) through 2031. The CBDC ban was attached to the sweeping housing bill, which is otherwise unrelated to crypto, but still faces hurdles in the House.

ENFORCEMENT ACTIONS AND LITIGATION

FEDERAL

Secret Service

• International law enforcement operation targets crypto fraud. In March 2026, the US Secret Service announced an international law enforcement operation aimed at disrupting crypto fraud networks, coordinating with partner agencies in Canada and the United Kingdom to identify and disrupt cryptocurrency-facilitated fraud schemes targeting victims across multiple countries.

DOJ

• The US Department of Justice (DOJ) announces seizure of USD61 million in cryptocurrency. In February 2026, the US Attorney's Office for the Eastern District of North Carolina announced the seizure of cryptocurrency valued at USD61 million in connection with fraud-related enforcement activity.

FinCEN

• FinCEN imposes USD3.5 million penalty against Paxful. FinCEN assessed a USD3.5 million civil monetary penalty in December 2025 against Paxful for willful violations of the BSA, including facilitation of approximately USD500 million in illicit activity through its peer-to-peer cryptocurrency exchange platform.

Federal court

• Court dismisses crypto case over money transmitter laws. On March 25, 2026, in Lewellen v. Bondi, No. 4:25-cv-00030-O, slip op. (N.D. Tex. Mar. 25, 2026), the US District Court for the Northern District of Texas dismissed a lawsuit brought by a crypto software developer who sought a preemptive ruling that his non-custodial crypto donation platform, Pharos, would not violate federal money transmission laws. The court found that Lewellen lacked standing to bring the case because he could not demonstrate a credible threat of prosecution under federal law governing unlicensed money-transmitting businesses. The court noted that recent DOJ guidance indicated authorities would not pursue enforcement actions against crypto businesses for end users' actions or for inadvertent regulatory violations, undermining Lewellen's claim that he faced a credible risk of prosecution. Because the case was dismissed without prejudice, Lewellen could bring the challenge again if circumstances change. The case drew amicus support from the Blockchain Association, Paradigm, the DeFi Education Fund, and the Uniswap Foundation, reflecting broader industry concern that developers of non-custodial software could face liability under financial laws designed for intermediaries. 

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