The DeFi Debrief

Week of April 14, 2025: President Trump Signs CRA to Invalidate IRS "Broker" Rulemaking; DOJ Crypto Memo; Crypto Letter to White House; Market Structure Structure Update; SEC Updates

President Trump Formally Voids IRS’s "DeFi Broker" Rule and Signs First US Crypto Legislation

Last week, President Trump signed into law House Joint Resolution 25, legislation to disapprove and void the Treasury Department’s Internal Revenue Service’s (IRS)  “DeFi Broker” rulemaking, "Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales.” This bill is the United States’ first-ever crypto legislation signed into law, and is a watershed moment for decentralized finance. 

DEF’s Take

DeFi Education Fund welcomes the growing bipartisan coalition of policymakers who have acted to protect DeFi’s promising future in the United States. We are deeply appreciative of Representative Mike Carey and Senator Ted Cruz’s leadership in sponsoring the legislation, and we look forward to continuing to work with policymakers from both sides of the aisle. 

For a comprehensive history, and a summary of what we can learn moving forward to 1) prevent burdensome and unreasonable requirements on DeFi front-ends, and 2) ensure that future tax policy does not violate the privacy of DeFi users or insert intermediaries where they do not exist – click here. 

The DOJ Releases Landmark Crypto Enforcement Memorandum 

Earlier this week, the Deputy Attorney General (DAG) of the United States Department of Justice (DOJ) released a memorandum to all DOJ employees titled, “Ending Regulation by Prosecution.” The memo is dated April 7, but was made public on April 8, 2025. In the memo, the DAG makes clear that the era of regulating the digital asset industry by prosecution is over: “The Department of Justice is not a digital assets regulator.” 

The DAG’s memo is an inflection point in the DOJ’s posture toward developers of decentralized software protocols. The memo is a significant step towards protecting software developers from liability for mere registration violations and for third parties’ misuse of the technology they created. However, there are important legal nuances for software developers to consider. For an in-depth analysis from DeFi Education Fund on the implications of the DAG memo, click here.

CFTC Chairman Implements DOJ Memo 

Following the release of the DOJ memo, Commodity Futures Trading Commission (CFTC) Chairman Caroline D. Pham directed CFTC staff to comply with the President’s Executive Orders and Administration policy, consistent with DOJ’s digital assets enforcement priorities and charging considerations. Chair Pham directed the Commission’s Director of Enforcement to mirror DOJ’s policy “to not seek to ‘charge regulatory violations in cases involving digital assets,’ in particular ‘violations of registration requirements under the Commodity Exchange Act,’ unless ‘there is evidence that the defendant knew of the licensing or registration requirement at issue and violated such a requirement willfully.’”

DEF’s Take

DeFi Education Fund (DEF) is deeply appreciative of the Deputy Attorney General’s efforts to uphold the rule of law and provide greater clarity on digital assets and software developer liability. The DOJ memo represents significant progress for the DeFi industry, and demonstrates a commitment by the Administration to both provide clear rules for developers and to strengthen America’s leadership in emerging innovation. 

DEF looks forward to actionable next steps implementing the principles of this memo, which recognize the importance of protecting non-custodial software development.  

Crypto Leaders Pen Letter to White House Crypto and AI Czar David Sacks 

On April 7, leaders across the crypto industry, in coordination with DeFi Education Fund, sent a letter to the White House Crypto and AI Czar, David Sacks, expressing concerns about the DOJ’s “extraordinary, lawless reinterpretation of federal money transmission licensing statutes to criminalize innovation in software development.” 

The letter expressed concern about this unprecedented theory of criminal liability advanced by the prior administration’s DOJ in its criminal prosecutions under Section 1960, which would subject software developers to criminal liability for the illicit conduct of third parties over which the developers have no control. 

The signatories call on the Trump Administration to protect the rights of American blockchain and crypto developers. For more information on the letter, read DEF’s thread here. 

Congress Continues to Progress on Market Structure Legislation  

Congress continues its focus on digital assets market structure legislation. On April 4, House Financial Services Committee (HFSC) Chairman French Hill (R-AR) and House Agriculture Committee Chairman GT Thompson (R-PA), the two leaders of House committees of jurisdiction, released an op-ed in Coindesk outlining principles for market structure legislation. Chairs Hill and Thompson recognized the importance of promoting innovation, providing clarity for classification of assets, codifying a framework for new issuance of digital assets, establishing regulation on spot market centralized exchanges, and establishing best practices for the protection of customer assets. 

Among the principles, the Committee Chairs underscored that “legislation must protect innovative decentralized projects and activities. Congress should ensure that decentralized protocols, which pose different risks and benefits, are not subject to regulations designed for centralized, custodial firms. In safeguarding decentralized activities, Congress must also protect an individual’s right to self-custody their digital assets.”

On April 9, 2025, both committees of jurisdiction held coordinated hearings to discuss and debate a proposed market structure framework. 

HFSC Hearing on Market Structure

The House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing entitled “American Innovation and the Future of Digital Assets: Aligning the U.S. Securities Laws for the Digital Age.” The hearing focused on the legal uncertainty facing the digital asset industry under the current securities laws, and discussed a comprehensive regulatory framework to protect users and promote innovation. Witnesses included Rodrigo Seira, Special Counsel at Cooley LLP, Tiffany Smith, Partner at WilmerHale, and Jake Werret, Chief Legal Officer at Polygon. These experts, and members of the committee, emphasized the urgent need for congressional action to provide clear, predictable rules for the digital asset industry. The hearing highlighted how the existing securities framework is insufficient to establish clear rules of the road for digital assets. 

House Ag Hearing on Market Structure 

The House Subcommittee on Commodity Markets, Digital Assets, and Rural Development, of the House Committee on Agriculture held a hearing entitled “American Innovation and the Future of Digital Assets: On-Chain Tools for an Off-Chain World.” Witnesses included Bill Hughes, Senior Counsel and Director of Global Regulatory Matters for Consensys; Mark Tague, Founder and CRO of CattleProof Verified; Mike Horton, Project Creator at GEODNET Foundation; Chris Brummer, Professor of FinTech at Georgetown University Law Center and CEO of Bluprynt; and Coy Garrison, Partner at Steptoe LLP. When asked for advice on how American regulators could learn from their foreign counterparts, Mr. Hughes said that American policymakers should imitate not having “a heavy hand on regulating the technology itself, because that allows innovation in real world applications.”

DEF’s Take

Both hearings highlighted a broad, bipartisan consensus that clearer rules are needed for the digital asset industry. DEF applauds the work of legislators for working to provide regulatory clarity for digital assets and focusing on how blockchain technology can be used in real world applications.

SEC Continues to Review and Scope Out Digital Assets 

The Securities and Exchange Commission continues its efforts to review prior actions on digital assets and provide clear guidance to market participants. 

SEC Releases Statement Scoping out Stablecoins 

In a major policy signal, on April 4, 2025, the SEC released a statement clarifying that certain fiat-backed stablecoins, termed “Covered Stablecoins,” are not securities under federal law, provided they meet specific criteria around redemption, reserve assets, and non-investment use. The SEC conducted both Reves and Howey analyses, concluding that Covered Stablecoins are neither “notes” nor “investment contracts” under controlling Supreme Court precedent. This move provides long-sought clarity for stablecoin issuers, potentially clearing a path for greater institutional adoption and regulatory certainty for the industry. It also creates a framework that separates stablecoins from other crypto assets and signals a more nuanced approach from the SEC. The SEC’s statement comes as proposed stablecoin legislation makes its way through both the House and Senate. 

SEC Chairman Instructs SEC to Review Crypto-Focused Guidance

On April 5, 2025, Acting-Chairman Mark Uyeda released a statement directing SEC staff to promptly review several staff statements and letters involving investing in cryptocurrencies and the application of securities laws to digital assets. The statement, made pursuant to Executive Order 14192, “Unleashing Prosperity Through Deregulation,” seeks to review the applicable statements and letters to determine if they should be “modified or rescinded” in accordance with the current priorities of the SEC. On the list: a 2019 Framework on how to review digital assets under Howey, 2022 guidance urging companies with exposure to crypto markets to disclose risks related to custody, liquidity, reputational damage, and regulatory scrutiny to investors, and a 2021 statement warning of unique risks from digital asset trading.

For a full list of the documents being reviewed click here.

SEC Releases Statement on Crypto Disclosures 

On April 11th, the SEC’s Division of Corporation Finance released a statement to clarify how the federal securities laws might apply to a company's offering and registration of securities tokens. While the Division’s non-binding statement does not address whether something is a security, it does provide guidance on information disclosures for issuers of securities. The statement focuses on identifying relevant disclosures that would provide investors with material information about the projects and businesses in which they might invest. 

The statement highlights, for example, disclosures about the development timeline of a crypto network or application, its functions and processes, and a clear explanation of the rights of holders of the relevant security, such as dividends, profit-sharing, or voting rights. The statement makes sure to state that a token that is not a security can be sold in a securities offering, but also allows for the possibility that a centralized crypto company might issue equity or debt securities or a crypto asset that is itself a security.

DEF’s Take

DeFi Education Fund commends the SEC for delivering on their promises to provide the digital assets industry greater clarity and looks forward to continued efforts under the recently confirmed Chairman Atkins. 

Paul Atkins Confirmed as Chairman of the Securities and Exchange Commission 

On April 9th, Paul Atkins was confirmed by the U.S. Senate in a 52-44 vote as the new chair of the SEC. 

DeFi Education Fund congratulates Paul Atkins on his confirmation as the next Chairman of the U.S. Securities and Exchange Commission. With extensive experience in crypto & financial regulation, and deep commitment to fostering fair and efficient markets, Mr. Atkins is well-equipped to lead the Commission into a new era—one that encourages innovation and ensures robust investor protections. We look forward to working with the Chairman to ensure the promise of DeFi in the United States. 

SEC Crypto Task Force Panel on Crypto Trading 

Last week, the SEC Crypto Task Force held an industry panel entitled, “Between a Block and a Hard Place: Tailoring Regulation for Crypto Trading.” After the Crypto Task Force’s recent panel on defining token security status, this panel primarily debated the potential regulation and practical considerations of crypto trading venues. 

In opening remarks, Acting SEC Chairman Mark Uyeda stated “Blockchain technology offers the potential to execute and clear securities transactions in ways that may be more efficient and reliable than current processes.” The Acting-Chairman continued, “Additionally, decentralized finance software protocols allow users to transact on a 24/7 basis via smart contracts. The drafters of the federal securities laws did not contemplate the use of blockchains or smart contracts to perform the functions of a transfer agent, facilitate the exchange of securities, or clear securities transactions.” 

Therefore, Chairman Uyeda suggested that a regulatory sandbox for crypto might be necessary, describing it as “a time-limited, conditional exemptive relief framework for registrants and non-registrants” that “could allow for greater innovation with blockchain technology within the United States in the near term.” 

In her opening statements, Katherine Minarik, Chief Legal Officer at Uniswap Labs, explained that, “In many ways DeFi shares a lot of the mission that drives the Commission including making markets more fair and efficient and protecting the participants in those markets." Minarik continued, “just because a new technology allows people to transact without an intermediary, it does not mean that we can or should regulate that technology, that infrastructure, as if it is an intermediary."