Dual registrant regulatory roundup - May 2025

SEC Division of Corporation Finance Staff Issue Statement on Stablecoins

• On April 4, the SEC’s Division of Corporation Finance (the Division) issued a statement (the Statement) expressing its view regarding whether certain stablecoins constitute securities and therefore are subject to the federal securities laws. The Statement describes “Covered Stablecoins” as stablecoins that share the following characteristics: (1) they are designed and marketed for making payments, transmitting money, or strong value (and not as investments); (2) they are designed to maintain a stable value relative to the USD, on a one-for-one basis, and can be redeemed for USD on a one-for-one basis (i.e., one stablecoin to one USD); (3) they are backed by assets considered low-risk and readily liquid (e.g., US Treasuries or money market funds) and redeemable on demand; and (4) its holders do not, and do not expect to, receive any earnings on the underlying assets.

• The Division, applying Reves v. Ernst & Young and SEC v. W.J. Howey Co., stated that: (1) offers and sales of Covered Stablecoins do not involve the offer and sale of securities under Section 2(a)(1) of the Securities Act of 1933 or Section 3(a)(10) of the Securities Exchange Act of 1934; and (2) transactions involving mining and redeeming Covered Stablecoins would not need to be registered under the Securities Act or rely on a registration exemption.

SEC Crypto Task Force Hosts Two More Crypto Roundtables

• On April 11, the SEC’s Crypto Task Force hosted a roundtable on tailoring regulation for crypto trading – the second in its series of five scheduled roundtables. The roundtable featured remarks from then-Acting Chairman Mark Uyeda and Commissioners Hester Peirce and Caroline Crenshaw. Then-Acting Chairman Uyeda spoke about the benefits and challenges of subjecting crypto assets to a single federal framework and noted that the Commission may consider a “time-limited, conditional exempt relief framework” while a more permanent, long-term solution is developed. The roundtable is available in its entirety to watch here.

• On April 25, the SEC’s Crypto Task Force hosted a roundtable on custody considerations for investment advisers and broker-dealers regarding crypto assets - the third in its series of five scheduled roundtables. The roundtable featured the first public statements by newly sworn in SEC Chairman Paul S. Atkins. Chairman Atkins focused on the potential financial and technological opportunities that crypto assets and distributed ledger technologies can bring to US investors while denouncing the SEC’s historical approach. Commissioner Hester Peirce expressed a similar willingness to facilitate the crypto asset market in the US and appeared to indicate in her opening remarks that self-custody, facilitated by distributed ledger technology, could live side by side with other options that involve the use of intermediaries.

• Much of the roundtable’s discussion focused on the differences between crypto custody and traditional asset custody, whether an entity that meets the definition of “qualified custodian” under the investment adviser custody rule could lawfully custody crypto assets, and whether the SEC should implement a crypto-specific custody regime.

• More information about the roundtable can be found here and can be watched in its entirety here.

FINRA Requests Comment on Modernizing its Rules, Guidance, and Processes to Reflect the “Modern Workplace”

• On April 14, FINRA published Regulatory Notice 25-07, which requests comment on modernizing FINRA Rules, guidance, and processes for the organization and operation of member workplaces. The Notice acknowledges that different technologies, digital platforms, communication channels, and workplace dynamics have resulted in regulatory requirements that could result in “confusion or inconsistencies” if not updated to account for modern practices.

• The Notice requests comment on a wide range of topics, including: (1) branch offices and hybrid work; (2) electronic delivery; (3) negative consent letters; (4) recordkeeping and digital communications; (5) payment of compensation to personal services entities; (6) qualifications and continuing education; (7) continuing commission programs; and (8) the registration process (e.g., Form U4).

• FINRA initially requested comment on the Notice by June 13, 2025, but recently extended the comment deadline to July 14, 2025. At the same time, FINRA extended the comment period on Regulatory Notice 25-04 to June 11, 2025, and Regulatory Notice 25-06 to June 18, 2025.

Paul S. Atkins Sworn in as SEC Chairman

• On April 21, Paul S. Atkins was sworn in as the 34th Chairman of the Securities and Exchange Commission (SEC). Chairman Atkins was nominated by President Trump on January 20, 2025, and confirmed by the US Senate on April 9, 2025. In a statement issued shortly after his swearing in, Chairman Atkins noted his goal of “advance[ing] [the SEC’s] mission to facilitate capital formation; maintain fair, orderly, and efficient markets; and protect investors.”

• As noted above, Chairman Atkins made his first official remarks in his role as SEC Chair at the Crypto Task Force’s April 25th roundtable. He noted that he “look[ed] forward to engaging with market participants and working with colleagues in President Trump’s Administration and Congress to establish a rational, fit-for-purpose regulatory framework for crypto assets.”