According to the complaint, law enforcement used blockchain analysis and other investigative techniques to determine that the cryptocurrency is connected to the theft and laundering of funds from victims of cryptocurrency investment fraud schemes, commonly referred to as 'cryptocurrency confidence scams.'

The complaint alleges that the cryptocurrency addresses which held the $225.3 million in cryptocurrency were part of a sophisticated blockchain-based money laundering network that executed hundreds of thousands of transactions and was used to disperse proceeds of cryptocurrency investment fraud across many cryptocurrency addresses and accounts on the blockchain to conceal the source of the illegally obtained funds.

See also: Head of the Criminal Division, Matthew R. Galeotti, delivers remarks in cryptocurrency investment fraud forfeiture announcement

The vote on the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was 68-30, with 18 Democrats joining most Republicans in favour of the bill. The GENIUS Act will now go to the House of Representatives.

The bill would amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude crypto tokens that are intrinsically linked to blockchain systems from the definition of securities. This would apply to most major cryptocurrencies including Ethereum, Solana, XRP and various governance tokens.

To qualify as a digital commodity, a token must be used to transfer value within a blockchain system. The bill also introduces a separate category for "mature blockchain systems" that meet certain decentralisation and transparency criteria, although registering as one is optional and offers limited regulatory relief.

The CLARITY Act establishes new compliance obligations for brokers, dealers and custodians, including asset segregation, customer disclosures and operational safeguards. It also introduces a registration regime for digital asset firms seeking to operate in the U.S. 

NASAA said the SEC should keep the following principles in mind when it forms its recommendations in order to achieve a "stable evolution of regulation that embraces cryptoassets while preserving the essential features of effective regulation":

• Investor protection must be the central part of any proposed regulation.

• Robust disclosures must be simple enough for novice investors to understand the risks of buying and trading cryptoassets and should be available on a trusted site
administered by a regulator.

• Exemptive frameworks for cryptoassets and businesses are better than jurisdictional exclusions because they can be tailored and adjusted as circumstances change.

• State antifraud and examination authorities must be preserved.

Senator Durbin’s amendment is based off his Crypto ATM Fraud Prevention Act, which aims to crack down on crypto scams by adding layers of protections to crypto ATM transactions and requiring greater transparency from cryptocurrency ATM operators. Senator Durbin will offer his amendment with Senators Jack Reed (D-RI) and Richard Blumenthal (D-CT). 

Specifically, Senator Durbin’s amendment will:

• Require warnings about the risk of fraud: This amendment would require cryptocurrency ATM operators to provide clear warnings to consumers about the risk of fraud, including warnings of common types of scams and that consumers should never send money to someone they have never met.

• Require operators to develop an anti-fraud policy: Cryptocurrency ATM operators would be required to appoint a chief compliance officer and develop a comprehensive anti-fraud policy, which must be submitted to the Financial Crimes Enforcement Network. Operators also would be required to provide live customer support during all operating hours.

• Protect new customers: New customers, defined as a customer within 14 days of their first transaction, would be protected by the following provisions:
  • Transaction limits of $2,000 per day, and $10,000 total over the first 14 days.
  • Full refunds for fraudulent transactions if the customer makes a report within 30 days.
  • Requiring live, verbal confirmation for any transaction greater than $500.

• Require crypto ATM operators to register and disclose ATM locations: Cryptocurrency ATM operators would be required to register with the Treasury Department and to disclose and regularly update the locations of all their ATMs. Operators would also be required to provide a point of contact to relevant regulators and law enforcement agencies.

• Require receipts and information sufficient to trace the transaction: Operators would be required to provide receipts for each transaction, including information sufficient to trace the transaction, such as the time, place, and amount of the transaction, and a transaction hash. Receipts also would have to include contact information for relevant law enforcement and a link to the operator’s refund policy.

SEC Commissioner Hester M. Peirce published a statement regarding the FAQs.

The SEC also published a speech by Commissioner Caroline Crenshaw 'Tokenization: Our Field of Dreams?'.

The OCC published Interpretive Letter 1184 to confirm that national banks and federal savings associations may buy and sell assets held in custody at the customer’s direction and are permitted to outsource to third parties bank-permissible cryptoasset activities, including custody and execution services, subject to appropriate third-party risk management practices. This authority was also addressed in OCC Interpretive Letters 1170 and 1183.