Lowenstein Cryptocurrency advises leading digital asset and cryptocurrency projects, exchanges and trading companies. Our practice covers regulatory advice, transactional and structuring advice, investigations and adversarial matters, including commercial litigation, bankruptcy and related litigation. As these markets continue their rapid growth and market participants continue to evolve and mature their businesses, we offer this weekly digest as a resource that highlights and summarizes a selection of key recent legal and regulatory developments.
President Trump pardons Binance founder Changpeng Zhao
On October 23, President Donald Trump granted a presidential pardon to Changpeng Zhao, the founder of the cryptocurrency exchange Binance, who in 2023 had pleaded guilty to various money laundering charges. In a statement, White House press secretary Karoline Leavitt said Trump acted within his constitutional authority, framing the pardon as part of his opposition to what he called the previous administration’s “war on cryptocurrency.” Zhao, who resigned as CEO of Binance following a $4.3 billion deal with the US government, had served a four-month prison sentence. The pardon allows Zhao to potentially return to the company he founded in 2017.
US Senate Members Hold Private Roundtable With Crypto CEOs On Market Regulation
On October 22, members of the U.S. Senate from both parties met privately with leading cryptocurrency executives to discuss comprehensive market regulation for the digital asset sector. The roundtable addressed key policy areas, including clearer jurisdictional boundaries between the Securities and Exchange Commission and the Commodity Futures Trading Commission, the creation of a federal framework for stablecoins and payment systems, enhanced anti-money laundering and sanctions compliance, enhanced consumer and investor protections, and measures to improve market integrity. Participants also considered issues related to custody standards, disclosure requirements, prudential oversight and tax treatment of digital assets. Despite the tensions reported during the discussions, bipartisan support for the proposed market structure legislation remains strong. The meeting renewed optimism among Washington lawmakers and crypto industry executives that a regulatory framework could be implemented as soon as 2026.
New York Lawmakers Introduce Bills to Tax High-Energy Crypto Mining
On October 17, Democratic lawmakers introduced companion bills in the New York State Assembly and Senate, Assembly Bill A9138 and Senate Bill S8518, which would impose an excise tax on electricity used by proof-of-work cryptocurrency mining operations. Proposed by Assemblymember Anna Kelles and Senator Liz Krueger, the legislation targets large-scale miners based on their energy consumption, with rates ranging from 2 to 5 cents per kilowatt hour (kWh) for consumption above 2.25 million kWh per year. Mining facilities powered solely by off-grid renewable energy would be exempt, with the aim of encouraging greener practices. Revenue from the tax would support the state’s energy affordability program. Critics say the move could make mining economically unviable, which could drive operations out of New York to more crypto-friendly states. The bills remain in committee, with a proposed implementation date of January 1, 2027. See Assembly Bill A9138 here and Senate Bill S8518 here.
Wyoming Tests State-Backed Stablecoin on Seven Blockchains
On October 20, the state of Wyoming launched a large-scale pilot of its government-backed stablecoin, Frontier (FRNT), deploying 700,000 tokens on seven major blockchains. Individually backed by US dollars and short-term treasuries with a 2% overcollateralization requirement, the token’s reserves are managed by Franklin Advisers and audited monthly by The Network Firm to ensure transparency. The multi-chain deployment aims to test cross-chain functionality and increase accessibility. A previous pilot showed major efficiency gains in payment processing, reinforcing the state’s ambition to use blockchain to improve financial operations. Although no public release date has been set, Wyoming officials are committed to continued transparency as they explore the token’s future role in financial systems. See the draft token management rules here.
Federal Reserve explores access to direct payments for crypto businesses
On October 21, US Federal Reserve Governor Christopher Waller said the Federal Reserve was considering introducing a new type of payment account designed to make it easier for small businesses to participate in the central bank’s payments system, signaling an end to the crypto industry’s banking access challenges. Speaking at the Payments Innovation Conference in Washington, DC, Waller noted that expanding access could drive innovation and competition in the U.S. payments ecosystem, particularly for underserved markets. The new payment accounts would seek to grant full access to fintech companies seeking to use the Federal Reserve’s payment services, which are currently reserved for large banks and financial institutions through the Federal Reserve’s “master accounts.” While no formal proposals have been released, Waller’s comments suggest a potential shift in how the Federal Reserve views the role of fintech and crypto companies in core financial infrastructure. Waller’s speech can be seen and heard here.
HMRC steps up enforcement of crypto taxes amid wider push for digital finance in UK
The UK government department responsible for tax collection, His Majesty’s Revenue & Customs (HMRC), has significantly stepped up its enforcement of crypto taxes, sending 65,000 warning letters, more than double last year’s total, to investors suspected of under-reporting or evading taxes on digital assets. This increase reflects a broader global trend, with countries like India also using shared data to pursue crypto tax evaders. From 2026, HMRC’s oversight will expand further under the Crypto Asset Reporting Framework, requiring detailed reporting on transactions from exchanges. UK tax rules treat crypto as a capital gain or income depending on how it is acquired, with recent rate hikes intensifying compliance pressure. Simultaneously, the UK is embracing digital finance innovation by lifting its ban on crypto-based exchange-traded notes, providing for a “digital markets champion” to oversee blockchain integration, and advancing digital securities initiatives through the new Dematerialization Market Action Task Force. All of these measures aim to modernize wholesale financial infrastructure while maintaining regulatory oversight. A sample warning letter can be read here.
British Columbia makes ban on new crypto mining connections official
On October 20, the British Columbia (BC) government introduced the Energy Statutes Amendment Act, which permanently bans new cryptocurrency mining operations from connecting to the BC Hydro power grid. This formalizes a temporary suspension first introduced in December 2022 and reflects the province’s efforts to manage growing demand for electricity by prioritizing sectors that provide greater economic and environmental value. The legislation does not affect existing cryptocurrency mining operations, but prevents future projects from accessing public electricity infrastructure. The province cited crypto mining’s low levels of job creation and economic contribution to justify the ban, placing it alongside new caps on electricity allocations for artificial intelligence and data centers. These measures are part of a broader strategy to preserve clean energy resources for industries aligned with B.C.’s climate and investment goals. The BC Government News press release can be read here.
