Regulatory update: SEC issues crypto asset interpretation, Phantom no-action relief; Kalshi advisory

Editor’s note: Our Regulatory Updates series highlights the latest regulatory, legal, and policy happenings relevant to the crypto industry, curated by the a16z crypto regulatory team.

Regulatory Update: February 25 – March 20, 2026

tl;dr

• The SEC issued an interpretation clarifying how the federal securities laws apply to certain crypto assets and transactions involving crypto assets. The interpretation provides a token taxonomy for digital commodities, digital collectibles, digital tools, stablecoins, and digital securities; addresses how a “non-security crypto asset”—which is a crypto asset that itself is not a security—may become subject to, and how it may cease to be subject to, an investment contract; and clarifies the application of federal securities laws to airdrops, protocol mining, protocol staking, and the wrapping of a non-security crypto asset.
• The CFTC’s Market Participants Division issued a no-action position in response to a request from Phantom Technologies, a developer of self-custodial crypto asset wallet software, stating that it will not recommend enforcement action against Phantom or its relevant personnel for failure to register as an introducing broker or associated person of an introducing broker in relation to the activities set forth in the letter and subject to certain conditions.
• The CFTC’s Division of Enforcement issued an advisory on its enforcement authority over prediction markets following the public release of two enforcement cases involving misuse of nonpublic information and fraud with respect to certain event contracts traded on KalshiEX.

Commodity Futures Trading Commission

• The CFTC’s Market Participants Division issued a no-action position in response to a request from Phantom Technologies, a developer of self-custodial crypto asset wallet software, stating that it will not recommend enforcement action against Phantom or its relevant personnel for failure to register as an introducing broker or associated person of an introducing broker in relation to the activities set forth in the letter and subject to certain conditions.
• The CFTC’s Division of Enforcement issued an advisory on its enforcement authority over prediction markets following the public release of two enforcement cases involving misuse of nonpublic information and fraud with respect to certain event contracts traded on KalshiEX.
• The CFTC published an advance notice of proposed rulemaking seeking public comment on the need to amend or issue new regulations concerning event contracts traded on prediction markets. The CFTC’s Division of Market Oversight also issued a prediction markets advisory regarding the listing for trading of event contracts.
• CFTC Chair Michael Selig and SEC Chair Paul Atkins discussed digital assets at Future of Finance 2026. Chair Selig said that the CFTC is working towards getting perpetual futures in the United States in the “next month or so.”
• CFTC Chair Michael Selig said that the CFTC is working to advance a crypto asset taxonomy at the FIA Global Cleared Markets Conference, and that he has directed CFTC staff to provide guidance concerning the application of the CFTC’s intermediary registration requirements to developers of non-custodial software systems.

Congress

• The Senate passed the 21st Century ROAD to Housing Act, which would prohibit the Federal Reserve from issuing or creating a CBDC or any digital asset. The provision has a sunset clause and ceases to be effective on December 31, 2030. The bill still requires approval in the House of Representatives. 
• House Representative Mike Levin (D-Cal.) and Senator Adam Schiff (D-Cal.) introduced the DEATH BETS Act, which would prohibit CFTC-registered entities from listing contracts that involve, relate to, or reference terrorism, assassination, war, or an individual’s death. Senator Chris Murphy (D-Conn.) and House Representative Greg Casar (D-Tex.) also introduced the BETS OFF Act, which would ban wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome.
• House Representative Young Kim (R-Cal.) and others introduced the Savings and Early Exposure to Diversified Securities Act, which would amend the Internal Revenue Code to treat digital asset indexes as eligible investments under Section 530A and remove the sunset provision from the TRUMP Accounts contribution program. 
• Senator Dick Durbin (D-Ill.) introduced the No Crypto in Social Security Act, which would prohibit Social Security Trust Funds from investing in cryptocurrencies.
• The Senate Banking Committee held a hearing entitled, “Update from the Prudential Regulators: Rightsizing Regulation to Promote American Opportunity.” Federal Reserve Vice Chair for Supervision Michelle Bowman, FDIC Chair Travis Hill, and Comptroller Jonathan Gould testified on various issues, including stablecoins and digital assets.
• Senators Chris Van Hollen (D-Md.) and others wrote to Treasury Secretary Scott Bessent and Attorney General Pamela Bondi urging them to “investigate reports that Binance is facilitating illicit finance activities, including transactions linked to Iran and its proxies.”

Department of Justice

• The DOJ sent a letter to the judge that presided over the trial of Tornado Cash co-founder Roman Storm, requesting to schedule a retrial for two unresolved counts after a jury deadlocked on conspiracy to commit money laundering and conspiracy to violate the International Emergency Economic Powers Act charges.
• The former CEO of crypto exchange Paxful was charged with conspiracies to fail to maintain an effective AML program, to operate an unlicensed money transmitting business, and to violate the Interstate and Foreign Travel or Transportation in Aid of Racketeering Enterprises Act. 
• The CEO of Goliath Ventures was charged with wire fraud and money laundering in connection with a Ponzi scheme that involved soliciting victims to invest money under false and fraudulent promises of monthly returns generated through cryptocurrency “liquidity pools.”
• A U.S. government contractor who allegedly stole more than $46 million in cryptocurrency from the U.S Marshals Service was arrested in a joint operation between the French Gendarmerie’s premier elite tactical unit and the FBI.
• A former CFO was sentenced to two years in prison after being found guilty of wire fraud for taking and secretly transferring approximately $35 million from his employer to a cryptocurrency platform he controlled as a side business and then losing the funds after the value in his cryptocurrency investments declined to nearly zero.
• U.S. authorities announced that the Scam Center Strike Force has frozen and seized more than $580 million of cryptocurrency from Chinese transnational criminal organizations.
• The DOJ filed civil forfeiture actions to recover more than $327,829 in USDT allegedly involved in laundering funds from an online romance fraud scheme targeting a Massachusetts resident, and, in a separate case, more than $3.4 million in USDT allegedly tied to proceeds of an online investment fraud and money laundering scheme.

Department of Homeland Security

• The U.S. Secret Service announced that law enforcement agencies from the United States, United Kingdom and Canada are conducting a joint international law enforcement initiative focused on identifying victims who may have lost, or are at risk of losing, crypto assets through “approval phishing.”

Department of the Treasury

• The Department of the Treasury issued a report to Congress on innovative technologies to counter illicit finance involving digital assets as part of the implementation of the GENIUS Act. Treasury also released the National Money Laundering Risk Assessment, the National Terrorist Financing Risk Assessment, and the National Proliferation Financing Risk Assessment reports for 2026.
• The IRS issued proposed regulations to make it easier for digital asset brokers to provide statements electronically to customers, rather than sending paper copies.
• OFAC sanctioned six individuals and two entities for their roles in Democratic People’s Republic of Korea government-orchestrated IT worker schemes. One of the sanctioned persons converted approximately $2.5 million into cryptocurrency for North Koreans.

Federal Deposit Insurance Corporation

• The federal bank regulatory agencies jointly issued answers to FAQs to clarify that an eligible tokenized security should generally receive the same capital treatment as the non-tokenized form of the security under the capital rule.
• FDIC Chair Travis Hill said that the FDIC is planning to address the applicability of FDIC pass-through insurance to payment stablecoins in rulemakings to implement the GENIUS Act.

Federal Reserve

• Kraken Financial announced that it has been granted a Federal Reserve master account, making it the first digital asset bank to gain direct access to the Federal Reserve’s payment infrastructure.
• The Federal Reserve published a staff paper, “Contrasting Ledgers: Considerations for U.S. Dollar Interbank Payment Systems,” which describes the current U.S. dollar interbank payments landscape and identifies its key characteristics.

Office of the Comptroller of the Currency

• The OCC issued a notice of proposed rulemaking to implement the GENIUS Act. This is  OCC’s first formal rulemaking under the GENIUS Act, and it applies to the issuance of payment stablecoins and certain related activities by entities that are subject to the OCC’s jurisdiction. Comments on the proposal are due May 1, 2026.

Securities and Exchange Commission

• The SEC issued an interpretation clarifying how the federal securities laws apply to certain crypto assets and transactions involving crypto assets.
• The SEC and the CFTC entered into a Memorandum of Understanding to guide coordination and collaboration between the two agencies to support lawful innovation, uphold market integrity, and ensure investor and customer protection. The agencies agreed to, among other things, closely coordinate and cooperate “to remove obstacles where appropriate, to the lawful introduction of novel derivative products, crypto asset products, or other products to market participants, customers, and investors.”
• The SEC filed a proposed final judgment as to its claims against Rainberry, Inc., Justin Sun, Tron Foundation, and BitTorrent Foundation. The proposed final judgment would settle the Commission’s claim against Rainberry related to wash trading, and dismiss, with prejudice, the Commission’s remaining claims against Rainberry and all claims against the others.
• The SEC proposed amendments to Exchange Act Rule 15c2-11, which sets out certain information gathering and review requirements for broker-dealers that publish quotations for, or maintain a continuous quoted market in, securities in the over-the-counter market. Commissioner Hester Peirce said that she is “particularly interested” in views as to the questions about the rule’s application to crypto assets.
• The SEC filed a joint stipulation with the founder of DeSo foundation and others to dismiss, with prejudice, the Commission’s civil enforcement action against them.

White House

• President Trump’s Cyber Strategy lists six policy pillars, including “Sustain Superiority in Critical and Emerging Technologies,” which calls for building “secure technologies and supply chains that protect user privacy from design to deployment, including supporting the security of cryptocurrencies and blockchain technologies” and promoting “the adoption of post-quantum cryptography and secure quantum computing.”

State

California 

• A former Los Angeles Police Department officer was convicted of taking $350,000 worth of cryptocurrency from a 17-year-old in a 2024 home invasion robbery.

Indiana

• Indiana Governor Mike Braun signed HB 1042 into law, allowing certain state retirement plans to offer self-directed brokerage accounts with at least one cryptocurrency investment option.

New York

• Bitcoin financial services company Strike announced that it has been granted a BitLicense and Money Transmitter License by NYDFS.

International

European Union

• The ESMA and the EBA published a compliance table on the suitability assessment of shareholders and members with qualifying holdings in issuers of ARTs and in CASPs.

Financial Action Task Force

• The FATF released a targeted report focusing on peer-to-peer transactions in stablecoins through unhosted wallets.

Malta

• The Malta Financial Services Authority published a position paper titled, “Potential Use of Tokenisation of Fund Units – Tokenised Fund Units as Collateral within Permissioned DLT Networks.”

United Kingdom

• The FCA announced that it has selected four firms to test stablecoin innovation in its regulatory sandbox.
• The UK government issued a policy paper on its “Fraud Strategy 2026-2029,” which discusses cryptocurrencies and states that they “pose growing risks, with investment fraud among the fastest-rising threats.”

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the current or enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/.

The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.