Crypto Update – May 15, 2025 | Lowenstein Sandler LLP
Lowenstein Crypto advises leading digital asset and cryptocurrency projects, exchanges, and trading firms. Our practice encompasses regulatory advice, transaction and structuring guidance, investigations, and adversarial issues including commercial disputes, bankruptcy, and related litigation. As these markets continue their rapid expansion and as market participants evolve and mature their businesses, we are providing this weekly digest as a resource to highlight and summarize a selection of key recent legal and regulatory developments.
SEC Withdraws Joint Statement on Broker-Dealer Custody of Digital Asset Securities
On May 15, the SEC withdrew the joint statement previously issued by the Division of Trading and Markets and the Financial Industry Regulatory Authority, Inc. (FINRA) regarding broker-dealer custody of digital asset securities (Withdrawn Statement). Under the Withdrawn Statement, the SEC required broker-dealers to consider their compliance with customer protection rules such as SEC Rule 15c3-3, which imposes certain obligations on broker-dealers who hold possession or control of digital asset securities. Moreover, the Withdrawn Statement highlighted how federal securities laws and regulations might apply to broker-dealers managing digital assets and strongly advised them to carefully assess all regulatory requirements when engaging in custody of digital asset securities. The withdrawal of this statement signifies the SEC’s commitment to navigating the evolving regulatory landscape surrounding digital assets. See the Withdrawn Statement here.
Former Celsius CEO Alex Mashinsky Sentenced to 12 Years for Fraud
Clayton, U.S. Attorney for the Southern District of New York, announced that U.S. District Judge John G. Koeltl sentenced Alexander Mashinsky to 12 years for committing commodities and securities fraud at Celsius Network (Celsius), which notoriously collapsed with a $1.19 billion deficit after promising unsustainably high interest rates in 2022. In addition to his prison sentence, Mashinsky has been ordered to forfeit $48.4 million and face three years of supervised release due to his role in misleading customers about Celsius’ safety and inflating the value of its native token, CEL. See the official press release from the United States Attorney’s Office for the Southern District of New York here.
SEC Chair Outlines Vision for Crypto Asset Regulation and Tokenization
On May 13, at the Securities and Exchange Commission’s (SEC) Crypto Roundtable, Paul Atkins, Chairman of the SEC, emphasized the transformative potential of blockchain-based securities, likening the transition from traditional to on-chain systems to the music industry’s shift from analog to digital formats. He underscored the promise of tokenization in enhancing capital formation and market efficiency and called for regulatory reforms to better accommodate crypto assets, stressing the need for clear, purpose-driven rules instead of ad hoc enforcement. The SEC is set to focus on three core areas: issuance, custody, and trading of crypto assets. With the support of the new Crypto Task Force, Atkins aims to promote innovation while safeguarding investors, asserting that the U.S. should lead the global crypto market with a rational and modern regulatory framework. See Atkins’ keynote address here.
Coinbase Joins S&P 500, Marking Milestone for Crypto Industry
As of May 12, Coinbase has become the first cryptocurrency company to be incorporated into the S&P 500. This achievement follows a series of notable events in the crypto sector, including record highs for Bitcoin and USDC, and a supportive federal government. Coinbase expressed gratitude for the work of its employees, customers, and partners in reaching this milestone, highlighting the company’s progress alongside the broader evolution of the crypto market. The inclusion of Coinbase in the S&P 500 reflects growing institutional recognition of the crypto sector’s role in the financial system. See a blog post by Coinbase’s Chief Financial Officer here.
Thailand To Issue $150 Million in Digital Investment Tokens for Government Bonds
Thailand’s Ministry of Finance plans to issue $150 million worth of digital investment tokens, named “G-tokens,” which will enable retail investors to purchase government bonds starting at $3. This initiative, announced by Finance Minister Pichai Chunhavajira, aims to provide broader access to investment opportunities previously available primarily to institutional and high net-worth investors. The G-tokens will be issued under the current budget borrowing plan but are not classified as debt instruments. These tokens will be tradable on licensed digital asset exchanges; however, they will not be accessible to non-Thai citizens residing in Thailand. This effort is part of a broader exploration of digital asset tokenization, with global tokenized bond values seeing growth.
Zimbabwe Introduces Blockchain-Based Carbon Credit Registry To Enhance Market Transparency
Zimbabwe has launched a new blockchain-based carbon credit registry designed to improve transparency and accountability in its carbon market. This initiative comes after the establishment of the Zimbabwe Carbon Markets Authority, which oversees the licensing and regulation of carbon credit projects. The project aims to restore investor confidence following a controversial policy change in 2023, which included abrupt project cancellations and demands for a share of proceeds that disrupted the sector. The newly developed registry by Dubai-based A6 Labs will provide a tamper-proof and traceable record of carbon credit activities, aligning Zimbabwe’s carbon market with global standards. This digital platform is expected to enhance trust in the authenticity and impact of Zimbabwe’s carbon credits. With a new regulatory framework in place, developers must meet eligibility requirements for project launches, ensuring compliance with environmental standards and attracting both domestic and international investment.
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