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In our Chain Reaction series, Baker Botts lawyers share their take on the fast-moving world of blockchain, digital assets, cryptocurrency and related innovative technologies, cutting through the noise to deliver clear, practical insights on the legal, regulatory, and market developments that matter.
GENIUS Act Proposal: Examining the Impact of Proposed Regulatory Framework on Institutional, Non-Institutional and Foreign Entities
Evan Koster, Charlie Gili
The Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act”), enacted in July 2025, establishes comprehensive federal guidelines governing the issuance of payment stablecoins in the United States. At a high level, the Act adopts the gating principles that (i) only “permitted payment stablecoin issuers” may issue payment stablecoins in the United States, and (ii) digital asset service providers are prohibited from offering payment stablecoins which are not issued by permitted stablecoin issuers or qualifying foreign issuers to U.S. users. Stablecoins that fall outside of the definition of “payment stablecoins” remain subject to other regulatory regimes, including, potentially the federal securities laws. The GENIUS Act will become effective at the earlier of January 18, 2027 or 120 days after final related regulations are issued.
While the GENIUS Act sets forth the statutory framework, it leaves substantial operational detail to implementing regulations. In March 2026, the Office of the Comptroller of the Currency issued a notice of proposed rulemaking (the “Proposal”) that provides the most comprehensive indication to date of how the regime is expected to function in practice. The Proposal adopts a bank-like model, with requirements relating to licensing, capital, reserves, custody and risk management. The Proposal requests public comment, with comments due back on May 1, 2026.
Set out in this article is a review of key provisions of the Proposal for (i) U.S. entities seeking to become stablecoin issuers, with a focus on institutional versus non-institutional entrants, and (ii) foreign issuers seeking access to the U.S. market.
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SEC Staff Issues Statement on Broker-Dealer Registration for Crypto Asset Securities User Interfaces
Evan Koster
On April 13, 2026, the Staff of the SEC's Division of Trading and Markets issued a statement clarifying that certain providers of front-end user interfaces (”Covered User Interface Providers”) — such as websites, browser extensions, and mobile applications — used to prepare user-initiated transactions in crypto asset securities will not be required to register as broker-dealers under Section 15(a) of the Exchange Act, provided they satisfy specified conditions. The statement applies to interfaces that convert user-identified transaction parameters into blockchain-legible commands for signature and transmission via a user's self-custodial wallet.
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Blockchain, AI Training Data, and Protecting Intellectual Property in the Next Deal
Ali Dhanani
The intersection of blockchain technology and AI training data disputes continue to generate significant market attention. This article offers practical perspective for companies seeking to protect and monetize their intellectual property in AI-related transactions, licensing, and investment. Copyright disputes have been prominent in the Courts concerning whether a company’s data has been used to train institutional and foundational AI models.
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SEC and CFTC Issue Interpretive Guidance Establishing Crypto Asset Classification Framework
Brendan Dignan
On March 17, 2026, the Securities and Exchange Commission (SEC) issued interpretive guidance establishing a framework for how the federal securities laws apply to certain types of crypto assets, and transactions involving crypto assets. The Commodity Futures Trading Commission (CFTC) separately indicated it will administer the Commodity Exchange Act consistently with the SEC's framework. The guidance categorizes crypto assets into five distinct types — digital commodities, digital collectibles, digital tools, payment stablecoins, and digital securities — and analyzes each under established federal court precedence to determine whether it constitutes a security. The guidance also addresses when non-security crypto assets become subject to, and may cease to be subject to, investment contracts, and clarifies that mining, staking, wrapping, and certain airdrops generally do not implicate the securities laws. While the guidance represents a significant shift from enforcement-driven regulation to affirmative guidance, it is not a binding regulation, and notable gaps remain, including the absence of any derivatives or swaps analysis. Market participants who hold, trade, issue, or advise on crypto assets should carefully review the guidance and assess its implications for existing and planned activities.
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CFTC Settlement in Singh Matter Highlights Cooperation Credit and Aiding-and-Abetting Claims
Michael Loesch
On April 1, 2026, the U.S. Commodity Futures Trading Commission (the “CFTC” or the “Commission”) announced that the U.S. District Court for the Southern District of New York entered a supplemental consent order (“the Supplemental Order”) resolving the Commission’s enforcement action against Nishad Singh, the former head of engineering at FTX. The final resolution is noteworthy for the Commission’s express reliance on cooperation in declining to impose a civil monetary penalty and for the application of fraud and aiding-and-abetting claims against a non-trading engineering executive.
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CFTC Brings First of Its Kind Insider Trading Action Against Prediction Market Trader for Maduro-Related Event Contracts Trading
Michael Loesch
On April 23, 2026, the U.S. Commodity Futures Trading Commission (the “CFTC” or the “Commission”) announced the filing of a civil enforcement action (the “Complaint”) against Master Sergeant Gannon Ken Van Dyke for alleged insider trading on Polymarket.com while “using classified nonpublic information regarding U.S. operations to capture former Venezuelan President Nicolás Maduro.” The Complaint filed in the Southern District of New York asserts that Van Dyke misappropriated sensitive military planning information in breach of several duties of trust and confidence and traded on that information in violation of multiple Commodity Exchange Act (the “CEA”) antifraud and insider trading prohibitions and related rules. The action reflects the CFTC’s first event contract insider trading charges and the first ever use of the specific prohibition on the misuse of government information (the so-called “Eddie Murphy Rule”). On April 23, 2026, parallel criminal charges against Van Dyke were also unsealed by the U.S. Attorney’s Office for the Southern District of New York.
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