The crypto regulatory landscape saw significant developments from mid-to-late February 2025, with major shifts in enforcement actions, policy clarifications, and international compliance milestones. This update captures key movements across U.S. federal agencies, Congress, and global jurisdictions—offering insights for developers, investors, and stakeholders navigating the evolving web3 ecosystem.
Key Highlights: Enforcement and Dismissals
In a notable turn of events, the Securities and Exchange Commission (SEC) filed a joint stipulation with Coinbase to dismiss its long-running civil enforcement action. The case, initiated over allegations that Coinbase operated as an unregistered securities exchange, broker, and clearing agency—and offered unregistered securities through its staking program—has now been formally dropped. While the dismissal marks a pivotal moment for centralized exchanges, it also sparked internal debate within the SEC.
Commissioner Hester M. Peirce welcomed the decision, emphasizing the need for clearer regulatory frameworks that support innovation without overreach. In contrast, Commissioner Caroline A. Crenshaw issued a dissenting statement, expressing concern that the withdrawal undermines investor protection efforts and sets an inconsistent precedent.
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This wave of enforcement recalibration extended beyond Coinbase. Several major players—including Robinhood Crypto, OpenSea, Uniswap Labs, and Gemini Trust Company—announced that the SEC had dropped pending investigations into their operations. These developments signal a potential softening in the SEC’s aggressive posture, at least temporarily, and may encourage greater transparency between regulators and industry builders.
Additionally, the SEC voluntarily dismissed its appeal in a case involving the expansion of the “dealer” definition under the Securities Exchange Act of 1934—a rule that could have swept decentralized finance (DeFi) participants into traditional securities frameworks. The move is widely seen as a win for DeFi advocates who argue that protocol users should not be conflated with regulated financial intermediaries.
Court Rulings: Legal Clarity for DeFi
The Second Circuit Court of Appeals upheld a lower court’s dismissal of a class-action lawsuit against Uniswap Labs, reinforcing the argument that decentralized protocols may not be liable under federal securities laws for token trades executed peer-to-peer on their platforms. The ruling strengthens legal distinctions between centralized entities and permissionless protocols, offering much-needed clarity for developers building non-custodial infrastructure.
Meanwhile, MetaMask developer Consensys confirmed that the SEC has agreed in principle to drop all claims in its ongoing enforcement case. Though final documentation is pending, this development suggests a growing willingness by regulators to engage constructively with foundational web3 tools.
Congressional Action: Tax and Oversight Reforms
On Capitol Hill, momentum is building for legislative reforms addressing crypto-specific challenges.
The House Ways and Means Committee voted 26–16 to advance a Congressional Review Act resolution aimed at overturning the IRS’s controversial decentralized finance (DeFi) broker reporting rule. If passed, the resolution would prevent the IRS from treating liquidity providers and smart contract interactors as tax-reporting brokers—a move strongly supported by industry groups concerned about compliance burdens.
In parallel, bipartisan senators—including Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY)—sent a letter to the SEC seeking clarification on whether staking rewards within digital asset exchange-traded products (ETPs) comply with current regulations. Their inquiry underscores growing legislative interest in aligning policy with technological realities.
House representatives also engaged financial regulators directly. A group led by Dan Meuser (R-PA) and French Hill (R-ARK) submitted recommendations to FDIC Acting Chair Travis Hill, urging clear guidelines for banks involved in digital asset custody, trading, and lending activities.
Department of Justice: Crackdown on Fraud and Illicit Activity
The Department of Justice (DOJ) remained active in targeting criminal misuse of blockchain technology:
- OKX, one of the world’s largest crypto exchanges, pleaded guilty to operating an unlicensed money transmitting business and agreed to pay over $504 million in penalties. The settlement highlights ongoing scrutiny of anti-money laundering (AML) compliance across global platforms.
- The founder of CluCoin was sentenced to 27 months in prison after misappropriating investor funds raised via an initial coin offering (ICO), later losing the capital to gambling.
- A Las Vegas entrepreneur was indicted for orchestrating a $24 million Ponzi scheme, falsely claiming his AI company mined cryptocurrency and guaranteed returns.
- The DOJ seized $31 million in crypto assets linked to the 2021 hack of Uranium Finance, demonstrating improved blockchain forensic capabilities.
- A Montana man was convicted of laundering proceeds from romance scams, BEC attacks, and real estate fraud through cryptocurrency networks.
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The FBI also issued a public alert confirming that North Korea’s Lazarus Group stole approximately $1.5 billion from Bybit in early 2025—a stark reminder of state-sponsored cyber threats in the digital asset space.
Federal Reserve: Acknowledging Potential and Risk
Federal Reserve Governor Michael S. Barr acknowledged the transformative potential of blockchain technology during a recent speech, stating it could make financial services “better, cheaper, and faster.” However, he also cautioned that crypto assets remain vulnerable to use in money laundering and terrorist financing, reinforcing calls for robust regulatory oversight.
International Developments
Norway
Norwegian authorities charged four individuals with running a large-scale crypto investment fraud scheme that allegedly defrauded thousands of investors.
European Union
- eToro received a full MiCA (Markets in Crypto-Assets Regulation) license from Cyprus, allowing it to offer crypto services across all EU member states—a significant step toward harmonized regulation.
- The European Central Bank (ECB) expanded its pilot program for settling transactions on distributed ledger technology (DLT) using central bank digital currency (CBDC), signaling continued institutional experimentation with blockchain-based settlement systems.
SEC Guidance on Memecoins and Public Engagement
In a landmark staff statement, the SEC’s Division of Corporation Finance clarified that most memecoins are more akin to collectibles than securities, noting they typically lack utility or functionality. The agency concluded that transactions involving such tokens generally do not constitute securities offerings under federal law—though individual cases may vary.
Commissioner Peirce further invited public feedback to the SEC’s Crypto Task Force on critical issues including:
- Token classification
- Trading and custody standards
- Lending protocols
- A potential safe harbor for compliant projects
She also discussed regulatory clarity, airdrops, and inter-agency coordination with the CFTC in a recent appearance on the Bankless podcast.
Frequently Asked Questions
What does the SEC’s dismissal of cases mean for crypto companies?
It suggests a temporary shift toward de-escalation, allowing firms more breathing room to innovate while awaiting clearer legislation. However, enforcement could resume depending on future leadership and market conditions.
Are memecoins now legal under U.S. securities law?
The SEC staff stated that most memecoins are not securities due to their lack of functionality or investment contracts. But this is not a blanket exemption—each token must be evaluated individually.
How will MiCA impact crypto users in Europe?
MiCA creates a unified regulatory framework across the EU, improving consumer protection, transparency, and market access for compliant platforms like eToro.
Is staking allowed in ETPs?
The SEC has not issued formal guidance. Senators Lummis and Gillibrand are pushing for clarification to ensure staking rewards can be included in approved crypto ETPs.
What are the implications of OKX’s $504 million penalty?
It underscores global regulators’ focus on AML compliance. Exchanges must ensure robust KYC procedures and reporting mechanisms—even if based offshore.
Could DeFi protocols still face liability?
While recent rulings favor protocol neutrality, entities providing centralized services (e.g., front-ends with control) may still be targeted under securities or fraud laws.
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As the regulatory environment evolves, collaboration between policymakers and builders will be crucial. The events of February 2025 reflect both progress and ongoing challenges—highlighting the need for balanced oversight that protects users without stifling technological advancement.