Explore the latest developments in crypto and fintech from this week’s newsletter, where Coinbase is challenging state regulations through federal lawsuits to advance prediction markets, and a $4 billion suit accuses Jump Trading of contributing to the TerraUSD collapse—highlighting the intensifying legal landscape. Legislatively, Congress is advancing a pivotal crypto market structure bill, the SEC is enabling mandatory arbitration for securities claims, and states like California are prioritizing targeted privacy enforcements. In the markets, Fireblocks acquires TRES Finance for $130 million, Morgan Stanley files for Bitcoin and Solana ETFs, and Strategy adds $116 million in BTC to its holdings. These updates offer essential insights—discover how they could shape your strategies.

Regulatory Updates

Michael Selig Sworn In as 16th CFTC Chairman
Michael S. Selig was sworn in as the 16th Chairman of the Commodity Futures Trading Commission on Monday, December 22, 2025, following his nomination by President Donald J. Trump and confirmation by the U.S. Senate. In remarks upon assuming office, Chairman Selig highlighted the rapidly evolving landscape of markets and technology, including the growing importance of digital assets and forthcoming digital asset market structure legislation that could help solidify the United States as a global hub for cryptocurrency innovation. Drawing on his extensive experience, including serving as chief counsel of the SEC’s Crypto Task Force and work on digital-asset regulatory frameworks, Selig now leads the CFTC at a pivotal time for both traditional derivatives and crypto markets. | Read more

UK Regulation of Cryptoassets to Start in October 2027
The UK government has set out plans to bring the crypto industry fully within the financial regulatory perimeter, aiming to unlock growth while strengthening consumer protections, with regulation scheduled to take effect from October 2027. Building on this announcement, the Financial Conduct Authority (FCA) launched a wide-ranging consultation on December 16, 2025, covering proposed rules for cryptoasset activities, signaling a significant step toward regulatory clarity and market integrity. | Read more

SEC Clarifies Custody Rules for Crypto Asset Securities by Broker-Dealers
On December 17, 2025, the U.S. Securities and Exchange Commission’s Division of Trading and Markets issued a staff statement on the custody of crypto asset securities by broker-dealers under paragraph (b)(1) of Rule 15c3-3 of the Securities Exchange Act. In circumstances where a broker-dealer takes the measures discussed below, the Division will not object to a broker-dealer deeming itself to have “physical possession” of the crypto asset security carried for the account of customers:

  1. Access to Crypto Asset Securities and Transfer Capability
  2. Assessment of Characteristics of a Crypto Asset Security’s Distributed Ledger Technology
  3. Not Undertaking to Maintain Custody of a Crypto Asset Security Due to Security or Operational Problems
  4. Protection of Private Keys
  5. Measures for Ensuring the Continued Safekeeping and Accessibility of the Crypto Asset Securities in the Event of Disruption

| Read more

Litigation Updates

Coinbase Draws a Federal Line in the Sand as States Move to Block Prediction Markets
Coinbase launched a bold legal offensive against Michigan, Illinois, and Connecticut, seeking federal court rulings that prediction markets, a fast-growing class of event-based trading products it plans to offer in early 2026, fall exclusively under the Commodity Futures Trading Commission’s jurisdiction rather than state gaming or gambling laws. The lawsuits, filed just after Coinbase announced a partnership with CFTC-regulated Kalshi to bring prediction markets to its platform, argue that state efforts to restrict or block these products would create a fragmented regulatory landscape that stifles innovation and exceeds states’ legal authority.  | Read More

IcomTech Promoter Sentenced to Nearly Six Years for Ponzi Scheme

A federal judge in the Southern District of New York sentenced Magdaleno Mendoza to 71 months in prison for his central role in the IcomTech cryptocurrency Ponzi scheme, which masqueraded as a legitimate crypto mining and trading company but instead defrauded investors by promising guaranteed returns that never materialized. Mendoza pleaded guilty to conspiracy to commit wire fraud and illegal reentry after deportation, and the court also ordered him to pay restitution and forfeit assets, as prosecutors emphasized that the scheme used new investor funds to pay earlier participants while enriching promoters and leaving victims with significant losses. | Read More

$4B Lawsuit Accuses Jump Trading of Orchestrating the TerraUSD Collapse
The bankruptcy administrator winding down Terraform Labs has filed a $4 billion federal lawsuit against high-frequency trading giant Jump Trading and key executives, alleging that the firm struck secret agreements to manipulate the TerraUSD (UST) and Luna ecosystem, profited massively by buying tokens at deeply discounted prices, helped prop up UST’s peg, and then enriched itself while the protocol ultimately collapsed in May 2022, wiping out roughly $40 billion and devastating investors, claims that Jump denies as meritless and a deflection from Terraform’s own failures. | Read More

Legislative Updates

California, Texas, and Virginia Signal the Next Wave of State Privacy Enforcement
In 2026, state privacy enforcement is shifting away from broad compliance frameworks and toward issue-specific consumer protections. Such protections include children’s data, geolocation data, biometrics, and health data. Three states in particular, California, Texas, and Virginia, are emerging as bellwethers for such regulations, with regulators in each state openly signaling their enforcement priorities and coordinating across agencies and jurisdictions. These moves suggest that companies operating nationally should reassess generalized privacy programs and consider targeted compliance strategies aligned with these states’ enforcement signals. | Read More.  

Congress Revives Crypto Market Structure Legislation with High Stakes for the Industry
Lawmakers are renewing efforts this week to pass a comprehensive crypto market structure bill with the goal of clarifying regulatory authority and establishing clearer compliance obligations for digital asset businesses. The Senate Banking and Agriculture Committees are advancing parallel drafts aimed at defining the respective roles of the SEC and CFTC, laying out token classifications, and clarifying registration requirements for exchanges, brokers, and other intermediaries. Both committees are expected to hold meetings on the drafts this Thursday.  Some key unresolved issues include the handling of stablecoin rewards, decentralized finance platforms, and restrictions on public officials’ crypto activities. If enacted, the legislation could critically reshape the regulatory landscape and encourage more onshore crypto activity in the United States. | Read More.

SEC Opens the Door to Mandatory Arbitration of Securities Class Actions
A recent SEC decision that allows public companies to adopt charter or bylaw provisions requiring mandatory individual arbitration of federal securities claims may fundamentally alter securities litigation. If this decision is widely adopted, the provisions could practically eliminate securities class actions entirely by preventing claim aggregation. This could significantly reduce litigation exposure and settlement pressures for issuers. Proponents of the decision argue that the change could address systemic abuses and excessive settlement costs, while critics contend that it may limit shareholder recovery for legitimate fraud claims. | Read More.

Market Updates

Fireblocks Acquires Crypto Accounting Platform TRES Finance for $130 Million
On January 7, 2026, blockchain infrastructure provider Fireblocks announced its acquisition of crypto accounting platform TRES Finance in a $130 million cash-and-stock deal, marking its fourth acquisition in under two years and aiming to create a unified operating system for digital assets with improved financial reporting and compliance tools. This move by Fireblocks, whose core business focuses on custody and transfers of crypto assets, underscores a continuing trend of consolidation in crypto infrastructure. | Read More

Morgan Stanley Files to Launch Bitcoin and Solana ETFs

On January 6, 2026, Morgan Stanley became the first top-10 U.S. bank to file for spot Bitcoin and Solana exchange-traded funds, seeking to offer crypto exposure through its wealth management platform amid growing institutional demand. The move builds upon growing exposure to cryptoassets by the Wall Street firm, which opened access to crypto funds for all of its clients last fall after previously making them available only to high-net-worth investors. | Read More

Strategy Begins 2026 with $116 Million Bitcoin Purchase

On January 6, 2026, Michael Saylor’s Strategy Inc. (formerly MicroStrategy) acquired 1,283 BTC for approximately $116 million at an average price of $90,447 per coin, increasing its total holdings to 673,783 BTC valued at over $62.6 billion. The purchase, funded through convertible notes, reflects Strategy’s continued confidence in Bitcoin as a treasury asset despite recent market dips. In the final quarter of 2025, Strategy recorded an unrealized loss of $17.4 billion on its Bitcoin holdings, driven by a decline in Bitcoin prices. The filing also reported a deferred tax benefit of $5 billion, which may reduce future tax obligations. | Read More

Stanford Professor Raises $15 Million for Babylon Staking Protocol
On January 7, 2026, Stanford cryptography professor David Tse secured $15 million in funding for Babylon, a decentralized protocol enabling Bitcoin staking to secure other blockchains like Solana and Binance Smart Chain. Backed by investors including Paradigm and Polychain, the raise aims to unlock Bitcoin’s $1.8 trillion in idle capital for broader ecosystem yields. | Read More

Coinbase to Buy The Clearing Company in Bid to Deepen Prediction Market Push
In late December, Coinbase announced its intention to acquire the Clearing Company, a startup with experience in prediction markets, to help grow its newly introduced prediction market platform. The deal will provide Coinbase with a team comprising industry veterans from both Polymarket and Kalshi and is part of Coinbase’s plan to become an “Everything Exchange” by offering a wide range of trading options and marketplaces. | Read More

Recent Updates

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