Launchy Regulatory Roundup #62 - IRS Clears Path for Crypto ETP Staking

📢 Sponsor | 💡 Telegram | 📰 Past Editions

Good Morning.

Welcome to our 62nd edition of the regulatory roundup. If you know anybody who would benefit from this content, please help us spread the word!

In Today's Edition:

• Headline: IRS Clears Path for Crypto ETP Staking 👀 

• Global Legal Roundup

• Case Study: a16z Seeks Exemption for Decentralized Stablecoins 🔎 

You read and share. We listen and improve. Send us feedback at [email protected].

HEADLINE

IRS Clears Path for Crypto ETP Staking

State of play: The IRS has released new guidance that lets exchange-traded products safely stake digital assets without jeopardizing their tax status.

• Treasury Secretary Scott Bessent said the move gives ETPs a clear path to earn and distribute staking rewards to retail investors.

• The update follows the SEC’s earlier stance that proof-of-stake activity is not a securities transaction.

• The 18-page guidance introduces a safe harbor with conditions like holding only one asset type plus cash and using a qualified custodian.

Legal experts say this removes a major compliance risk:

• By turning staking into a tax-recognized, institution-friendly activity, the IRS is opening the door for ETFs, trusts, and other vehicles to stake on proof-of-stake networks, likely boosting staking adoption across the industry.

What’s Next: ETPs and spot crypto ETFs are now expected to explore staking programs, especially for networks like ETH, SOL, and ADA. Asset managers will likely begin updating filings and custody setups to meet the safe harbor rules.

Why it Matters: This unlocks new yield streams, strengthens proof-of-stake networks, and brings traditional finance deeper into onchain participation.

Our Take: The IRS just removed one of the biggest barriers keeping ETFs from staking. Expect major issuers to move quickly, and expect staking yields to become a standard feature across PoS-aligned products.

GLOBAL LEGAL ROUNDUP

America:

• 🇺🇲 CFTC chair confirms push to launch leveraged spot crypto trading.

• 🇺🇲 Oklahoma man gets 6 years for leading $9.4M crypto investment fraud.

• 🇺🇲 SEC Chair unveils plan for 'token taxonomy' to redefine crypto regulation.

• 🇺🇲 DOJ says US citizens helped N.Korean IT workers infiltrate 136 companies.

• 🇺🇲 US regulator mulls guidance for tokenized deposit insurance, stablecoins.

• 🇧🇷 Brazil extends financial sector regulations to crypto service providers.

Europe:

• 🇬🇧 Bank of England opens consultation on 'systemic' GBP stablecoin rules.

• 🇬🇧 ClearToken wins approval for crypto & tokenized asset settlement system.

APAC:

• 🇸🇬 Singapore to trial tokenized bills settled with CBDC.

• 🇯🇵 Japan Exchange Group weighs tighter oversight of listed DATs.

• 🇯🇵 Japan mulls new rule limiting crypto custody to registered providers.

CASE STUDY

a16z Seeks Exemption for Decentralized Stablecoins

State of play: a16z crypto is urging the US Treasury to clarify that decentralized stablecoins should not fall under the GENIUS Act’s oversight.

• The firm argued that only payment stablecoins issued by identifiable entities should be regulated. Meanwhile ,decentralized assets like LUSD, created by autonomous smart contracts, should remain outside the Act’s scope.

• The firm said the law’s current language risks sweeping decentralized systems into rules intended for centralized issuers.

• It recommended adopting a control-based decentralization test from the Digital Asset Market Clarity Act, which would keep validators, node operators, and non-custodial developers out of intermediary regulation.

• a16z also pushed for modernized AML and KYC rules that do not hinder decentralized innovation.

• As part of a parallel response to FinCEN, the firm proposed decentralized digital identity as a stronger, privacy-preserving approach to combating illicit finance, highlighting tools like zero-knowledge proofs and multi-party computation.

Our Take: Overall, a16z’s message is clear. Regulate issuers, not decentralized protocols, and use cryptographic identity solutions to strengthen compliance without sacrificing user privacy or innovation.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our comprehensive database of crypto regulations around the world👇

NOTEWORTHY READS & MEME

• Gavin Zavatone’s read on Paul Atkins’s speech.

• Stephen Miran’s speech on A Global Stablecoin Glut.

• Nic Carter’s read on Situating Stablecoins in the Payments Landscape.

If you enjoy reading this issue, please consider subscribing. It takes 1 minute of your time but it would mean the world to us 🙇

Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.