Crypto Chronicles: Navigating Legal Developments in the UK and U.S.

One of the many strengths of decentralised blockchain technology and the crypto markets is that they are truly global. The opportunities this provides are enormous, which is a big reason for the rapid growth in cryptoasset activities. However, with opportunity comes legal risk, and the legal and regulatory landscape for cryptoassets has been rapidly evolving to keep apace.

Given that crypto markets and companies operate across borders, market participants should be aware of important international legal and regulatory developments. In this OnPoint we analyse two of the world’s largest crypto markets: the United Kingdom (UK) and United States (U.S.), which are collaborating to support the use and responsible growth of digital assets.¹ We look at the principal legal and regulatory developments in these countries and provide some key takeaways.

At the heart of both jurisdictions, there is a desire to strengthen technological innovation whilst ensuring market integrity. However, as we explore below, there is a slight divergence in approach with the UK’s courts and regulators adopting an increasingly proactive approach in setting rules and boundaries to protect consumers, whilst the U.S. is adopting a more hands-off approach in terms of regulation and enforcement under the new administration.

The UK

The UK Courts, regulators and legislature are consistently seeking to provide clarity and increased protection for market participants. As recently as May 2025, the UK Financial Conduct Authority (FCA) published a Discussion Paper titled Regulating Cryptoasset Activities to seek market views on the issue.² As the FCA works towards the introduction of a new regulatory regime due to go live in 2026, we outline some of the key UK legal and regulatory developments.

Key legal developments

1. Cryptoassets are property – Since 2019, through the UK Jurisdiction Taskforce’s Legal Statement on Cryptoassets and Smart Contracts, the UK has provided authoritative recognition that cryptoassets could be classed as property under English law. Later that year, the UK Courts provided judicial backing to this position in AA v Persons Unknown³ by ruling that cryptoassets like Bitcoin can be treated as property, such that they could be subject to proprietary injunctions and other proprietary remedies such as freezing orders. This is a key development as it provides victims of crypto fraud with a useful tool to assist in recovering their stolen assets. However, this decision, amongst other decisions over the years affirming that cryptoassets are treated as property under English law (e.g., Ion Science Ltd v Persons Unknown,⁴ D’Aloia v Persons Unknown and Others⁵ and Jones v Persons Unknown⁶) have been predominately interim decisions which are not fully authoritative. In welcome news, the legislators are therefore intending to cement the treatment of digital assets as property by introducing the Property (Digital Assets etc.) Bill in the UK House of Lords, providing that “a thing that is digital or electronic in nature” may be capable of attracting property rights even if it does not fit into either of the two categories of personal property that have traditionally been recognised under English law (and it is widely accepted that cryptoassets do not neatly fall within these categories): (i) things in possession (generally, tangible things); and (ii) things in action (where personal property can only be claimed or enforced through a court action).⁷ The Bill is currently being considered by the House of Commons in order to be finalised.
2. Duties of developers – In the 2023 case of Tulip Trading Ltd v Bitcoin Association for BSV & Others,⁸ the UK Court suggested that cryptocurrency software developers may owe fiduciary duties to their users. This decision could have significant implications for developers, as they have sole authority to modify a network’s software and amend the blockchain to implement a Court order for the restitution of cryptoassets.
3. Defences for exchanges – Exchanges can often be sued by victims of crypto fraud for the monetary value of the misappropriated assets that flowed through their accounts. In the 2024 case of D'Aloia v Person Unknown,⁹ the Court confirmed that exchanges may defend such claims by relying on the defences of change of position and bona fide purchaser for value without notice,¹⁰ provided that they were acting in good faith when dealing with the assets. This judgment provides comfort to exchanges but underlines the importance of implementing adequate AML systems and controls, including effective account monitoring systems and other compliance policies, to avoid liability for fraudsters operating on their platforms.
4. Service of cryptoasset claims via NFTs – It is now well established that the UK Courts are willing to accept service of cryptoasset claims via non-fungible tokens (NFTs) (e.g., D’Aloia, Osbourne v Persons Unknown & Ors¹¹ and more recently Tai Mo Shan Ltd v Persons Unknown¹²). It underlines the UK Courts’ continued willingness to apply existing legal principles to new technologies, enabling market participants to pursue wrongdoers.

Key regulatory developments

1. UK government’s intentions for new cryptoasset regulatory framework - In November 2024, the new government confirmed its plans to proceed with legislation to bring certain cryptoassets activities into the FCA’s regulatory perimeter. The planned regulatory changes will be implemented by amendments to the UK Financial Services and Markets Act 2000 (FSMA) and will apply to any cryptoasset regulated activities provided in the UK (i.e., even by firms based in another country). Key proposals include: (i) FCA authorisation required for firms who conduct activities such as issuance, trading, lending, custody, promotion and intermediation of cryptoassets, including stablecoins; (ii) introduction of a new market abuse regime tailored specifically for cryptoassets; and (iii) firms, exchanges and custodians to be expected to adhere to the same financial crime standards that currently apply to traditional financial services activities, resulting in broader compliance duties with rules of anti-bribery, corruption, sanctions and fraud. This enhanced level of regulatory oversight is to be welcomed, as it will bring more confidence to the reliable operation of crypto markets.
2. FCA’s crypto regulation due to begin in 2026 – The FCA published an indicative roadmap¹³ of key dates for the development and introduction of the UK’s crypto regime, which envisages that the new regulatory regime will go live in 2026. This has been long awaited by the industry, which has been seeking clarity on timing since the last update published by HM Treasury in October 2023. In April, the FCA also commented on the importance of international coordination in regulating cryptoassets due to the cross-border nature of digital markets to ensure a global approach, which it seeks to address through its close work with the International Organisation of Securities Commission.

Key takeaways

To cater for the increasing use of cryptoassets, it is essential that the legal and regulatory worlds keep pace to ensure that market integrity is maintained. The proactive approaches of the UK Courts, regulators and legislature are helping to ensure this is the case, thereby enabling markets to thrive and mature.

However, increased scrutiny from the Courts and regulators strongly suggests that enforcement action will increase in parallel. Firms should monitor legal developments and implement robust compliance systems and controls to mitigate the risks associated with the fast evolving legal and regulatory landscape. It is prudent for firms to start planning now for the new regulatory changes once the draft legislation and FCA papers are finalised and published.

The U.S.

The beginning of 2025 started with significant changes in U.S. crypto regulation and policy, indicating a move towards a more permissive approach as the U.S. aims to strengthen its leadership in digital financial technology. On January 21, 2025, the U.S. Securities and Exchange Commission (SEC) introduced a Crypto Task Force (Task Force) to develop a comprehensive and clear regulatory framework for cryptoassets. The SEC has released a list of items on the agenda for its Task Force, sought input from the crypto industry on a range of questions and agreed to dismiss several existing enforcement actions. Right after the Task Force was introduced, on January 23, 2025, President Donald Trump issued an executive order, titled Strengthening American Leadership in Digital Financial Technology (Executive Order) which played a key role in setting the stage for these changes. The Executive Order aimed to support the responsible growth and use of cryptoassets and established a working group to develop a comprehensive regulatory framework. We consider these and other important developments in the U.S. further below.

Key developments

1. The Executive Order – It declared a new approach to crypto regulation and enforcement. Its aim is to “promote United States leadership in digital assets and financial technology while protecting economic liberty” and “support the responsible growth and use of digital assets.” The Executive Order introduced an inter-agency team called the President’s Working Group on Digital Asset Markets (Working Group). The Working Group is chaired by David Sacks, who is informally referred to as the “Crypto Czar,” and includes several officials from various key agencies, including Treasury and the Justice Departments. The Working Group is required to report its findings to the President by July 22, 2025. Within 180 days of the date of the Executive Order, the Working Group shall (i) recommend a regulatory framework governing the issuance and operation of digital assets, including stable coins, in the U.S.; and (ii) propose criteria for establishing a national digital asset stockpile. This “plan” clearly shows a shift from the previous administration policy. Separately, the report should address market structure, oversight, consumer protection and risk management, and create more clarity on the jurisdiction between federal regulators, such as the SEC and CFTC.
   For more information regarding the Executive Order, please see our OnPoint here.
2. The Task Force - The Task Force is chaired by Hester Peirce, the new Commissioner to the SEC, and is “dedicated to developing a comprehensive and clear regulatory framework for crypto assets.”¹⁴ On February 4, 2025, Commissioner Peirce issued a statement¹⁵ with the list of items that are on the Task Force’s agenda, in particular:
   • Security Status: The Task Force is examining the different types of cryptoassets, including their status as securities.
   • Scoping Out: The Task Force is working to identify areas that fall outside of the Commission’s jurisdiction and is inviting requests for no-action letters to help clarify jurisdiction.
   • Coin and Token Offerings: The Task Force is considering recommending temporary prospective and retroactive relief for coin or token offerings if the issuing entity expresses consent to the SEC’s anti-fraud jurisdiction and provides information.
   • Registered Offerings: The Task Force is considering allowing viable paths to token registration.
   • Special Purpose Dealer: The Task Force is exploring updates to the special-purpose broker dealer no-action statement to address both cryptoasset securities as well as cryptoassets that are not securities. (As we discuss below, the SEC has now followed up with guidance on this topic.)
   • Custody Solutions for Investment Advisors: The Task Force is working on providing an appropriate custodial framework for advisors.
   • Crypto-Lending and Staking: The Task Force is planning to clarify whether crypto-lending and staking programs are covered by securities law. (As we discuss below, the SEC has now followed up with guidance on this topic.)
   • Crypto Exchange-Traded Products: The Task Force will work to clarify the approach used when considering applications to list new products.
   • Clearing Agencies and Transfer Agents: The Task Force plans to work on improvement of crypto intersection, clearing agency and transfer rules.
   • Cross-Border Sandbox: The Task Force will consider ways to facilitate cross-border experimentation.

   Commissioner Peirce followed up on this list of agenda items by inviting industry and investor inputs on a range of questions relating to each of these 10 topics above.¹⁶ Since this statement in February, industry participants have contributed dozens of submissions on each topic, and the SEC has held a series of roundtables on topics ranging from the security status of cryptoassets, to custody and decentralized finance.
   For more information regarding the Task Force’s agenda, please see our OnPoint here.

3. SEC ends investigations and dismisses charges - On February 21, 2025, the SEC closed its investigations into the NFT marketplace against OpenSea and into Robinhood Markets’ crypto arm with no further actions taken.¹⁷ On February 27, 2025, the SEC also dismissed the ongoing civil enforcement actions against Coinbase.¹⁸ Commissioner Peirce supported the dismissals and criticized the previous Commission for shifting responsibility for developing regulations from the SEC’s policy divisions to the Division of Enforcement, which created a lack of clarity, and blocked building interesting and innovative products.¹⁹ Other ongoing actions against entities such as Kraken, Ripple, DRW Cumberland and Consensys have also been dismissed. Notably, these dismissals are with prejudice, so that the same claims cannot be re-filed by the SEC in that court. Also notably, the SEC notes that each dismissal is intended to facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry and is not based on the merits of the case.
4. SEC clarifies that meme coins are not securities - On February 27, 2025, the SEC’s Division of Corporation Finance announced that “meme coins” (a type of cryptoasset inspired by internet memes, characters or trends and are primarily used for trading and entertainment purposes), were not securities subject to SEC oversight.²⁰
   For more information regarding the SEC's statement on meme coins, please see our OnPoint here.
5. SEC clarifies that certain stablecoins are not securities – On April 4, 2025, the SEC’s Division of Corporation Finance issued a statement regarding certain U.S. dollar-backed “stablecoins” (cryptoassets designed to maintain a stable value relative to one or more other assets). The statement clarified that stablecoins that are (i) linked to the U.S. dollar; (ii) redeemable at a fixed one-for-one rate; and (iii) backed by low-risk, liquid reserves, are not securities under the federal securities laws.²¹ This regulatory clarity may lead to greater adoption of stablecoins by crypto exchanges and other market participants, as well as greater dollarization of the crypto markets.
   For more information regarding the SEC's statement on stablecoins, please see our OnPoint here.
6. SEC issues statement on disclosures in cryptoasset-related securities offerings – Also in April, the SEC’s Division of Corporation Finance issued a statement outlining disclosure expectations for entities conducting offerings of securities in connection with cryptoasset-related activities. The statement provides detail on several categories of required disclosures for issuers of debt or equity securities whose operations relate to networks, applications and/or cryptoassets, including: the description of the issuer’s business; risk factors; the terms, rights, characteristics and obligations associated with the securities offered; the technical specifications of the securities offered; the directors, executive officers and significant employees of the issuer; and the issuer’s financial statements and exhibits.
   For more information regarding the SEC's statement on these disclosures, please see our OnPoint here.
7. SEC withdraws a statement and issues FAQs permitting broker-dealers to take custody of cryptoassets - On May 16, 2025, the SEC’s Division of Trading and Markets and FINRA (the U.S. self-regulatory body for broker-dealers) withdrew a controversial 2019 joint statement on broker-dealer custody that imposed major obstacles for SEC-registered broker-dealers to take custody of cryptoassets. Custody of cryptoassets had been restricted to a small class of “special purpose broker-dealers.” On the same day, the SEC issued a series of “Frequently Asked Questions” clarifying that all broker-dealers (and not just special purpose broker-dealers) could take custody of cryptoasset non-securities (such as Bitcoin), alongside cryptoasset securities.
   For more information regarding the SEC's statement on broker-dealer custody, please see our OnPoint here.
8. SEC issues statement on protocol staking activities - On June 9, 2025, the SEC’s Division of Corporation Finance issued a statement clarifying that under specific conditions, staking cryptoassets on proof-of-stake networks does not constitute an offer or sale of securities under federal securities laws. Specifically, the SEC analyzed self-staking, self-custodial staking with a third party and custodial staking, concluding that these activities are administrative rather than entrepreneurial and do not result in the offering or sale of a security. Services like slashing coverage, early unbonding, modified reward payment timing and aggregation are considered ministerial and thus do not convert staking into a security.
   For more information regarding the SEC's statement on meme coins, please see our OnPoint here.

Key takeaways

The President’s administration has declared its intent to take a far more hands-off approach to crypto-related regulation and enforcement. The SEC has moved to ease its crypto-related regulations under President Trump's leadership. The newly established Task Force is focusing on clarifying the regulatory framework around cryptoassets to ease the adoption of cryptoassets and provide regulatory comfort to cryptoasset market participants.

While significant pieces of legislation on stablecoins and crypto market structure are currently pending before Congress, the crypto-friendly initiatives of a number of U.S. regulators have already prompted a spate of crypto-related activities. These initiatives are likely to continue at a rapid pace, and market participants should therefore monitor legal developments in order to remain informed in the highly dynamic U.S. regulatory landscape.