Crypto Brief – August 7, 2025
Lowenstein Sandler LLP provides its latest weekly update on key legal and regulatory developments shaping the cryptocurrency and digital asset markets. As these markets continue to grow and evolve, the firm’s Lowenstein Crypto practice offers timely insights relevant to investors, developers, and industry participants. This briefing highlights significant regulatory clarifications, enforcement actions, and initiatives across the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
SEC Clarifies Liquid Staking Not a Securities Offering
On August 5, 2025, the SEC’s Division of Corporation Finance issued a statement clarifying that certain liquid staking activities do not constitute the offer and sale of securities under the Securities Act of 1933. The key rationale is the absence of “entrepreneurial or managerial efforts” by third-party staking service providers in relation to depositors’ crypto assets.
Specifically, when owners deposit their crypto assets with a third-party staking service and receive staking receipt tokens in return—tokens evidencing ownership and accrued rewards—the issuance of these tokens is also not considered a securities offering. This clarification builds on earlier guidance issued by the Division in May 2025 and seeks to provide legal certainty around liquid staking protocols in the decentralized finance (DeFi) ecosystem.
The Division’s full statement is available on the SEC website, providing additional context for market participants engaging in or considering liquid staking arrangements.
CFTC Launches Crypto Sprint to Advance Regulatory Clarity
The Commodity Futures Trading Commission (CFTC) announced on August 1 the launch of a “crypto sprint,” an initiative designed to implement recommendations from President Donald Trump’s Working Group on Digital Assets market report. Acting Chair Caroline D. Pham emphasized the agency’s commitment to fostering innovation and improving regulatory clarity to support the United States’ leadership position in the digital asset sector.
This initiative, part of the broader Project Crypto, follows recent CFTC activities such as hosting the Crypto CEO Forum and exploring a digital asset markets pilot program. It also includes reviewing public comments received on 24/7 crypto trading and perpetual derivatives markets.
Building on the crypto sprint, the CFTC on August 4 unveiled a new initiative aimed at enabling spot cryptocurrency contract trading on registered designated contract markets (DCMs). This marks a significant step toward expanding regulated on-ramps for digital asset trading under the Commodity Exchange Act. The approach invites public input on listing standards, legal considerations under CFTC and SEC frameworks, and potential regulatory overlaps, with comments open through August 18. Full details and comment submission guidelines are accessible on the CFTC’s official website.
SEC’s Crypto Task Force Launches Nationwide Roundtables
Seeking broader stakeholder engagement, the SEC announced on August 1 that its Crypto Task Force, led by Commissioner Hester Peirce, will conduct a series of roundtable discussions across the United States from August through December 2025. These sessions aim to involve crypto market participants, especially small and early-stage projects with fewer than ten employees and less than two years of operation, who may not have had opportunities to participate in prior Washington, D.C.-based meetings.
Planned locations include Berkeley (California), Boston, Dallas, Chicago, and New York. The initiative strives to promote regulatory inclusivity and gather diverse perspectives from emerging players shaping the future of crypto innovation. Interested parties are invited to submit meeting requests via email, with participant lists published to ensure transparency.
The SEC’s press release provides additional information on how to participate.
SEC Takes Enforcement Action Against MyConstant Founder
On August 5, the SEC issued a cease-and-desist order against Huynh Tran Quang Duy, founder and sole owner of the online lending platform MyConstant. The order charges Huynh with making material misrepresentations to investors and misappropriating funds raised through the platform.
Between September 2020 and November 2022, Huynh promoted a loan-matching service touted as a low-risk, crypto-backed investment. However, the SEC alleges he misused over $415,000 for personal expenses and invested approximately $11.9 million of investor funds in the ill-fated TerraUSD crypto asset, which collapsed causing major losses. MyConstant ceased operations in November 2022 and returned only a fraction of investor capital.
Consequences include monetary penalties, disgorgement, and a lifetime ban barring Huynh from serving as an officer or director of any securities issuer. The full administrative order is publicly available for review.
Tornado Cash Co-Founder Convicted on Unlicensed Crypto Money Transmitting Charge
On August 6, after two days of deliberation, a federal jury convicted Roman Storm, co-founder of the Tornado Cash cryptocurrency mixer, for conspiring to operate an unlicensed money-transmitting business. The jury could not reach verdicts on additional charges including money laundering conspiracy and sanctions violations under the International Emergency Economic Powers Act.
Prosecutors argued that Tornado Cash facilitated over $1 billion in illicit transactions—including activity linked to the sanctioned Lazarus Group—between 2019 and 2022, with Storm and his collaborators knowingly failing to implement controls to prevent illegal use. The defense countered that Tornado Cash was a legitimate privacy tool, emphasizing the autonomous nature of its smart contracts reduced founder control.
The U.S. Attorney’s Office issued a press release detailing the case and the implications for crypto compliance and enforcement.
Lowenstein Sandler LLP continues to monitor and analyze these developments in the dynamic digital asset regulatory landscape. For legal counsel related to cryptocurrency projects, exchanges, or compliance matters, contact Ryne Miller or Ethan L. Silver at Lowenstein’s investment management and commodities groups.
This Crypto Brief is intended to provide an accessible summary of recent regulatory and enforcement updates as of August 7, 2025, and should not be construed as legal advice.