Strict Penalties Introduced

The new law enforces:

• Fines up to 250 million vatu ($2 million)
• Prison sentences of up to 30 years

Government consultant Loretta Joseph warned that “God help any scammer that goes into Vanuatu because you’ll go to jail.”

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She emphasized the goal of preventing scandals like the FTX collapse, stating, “This is certainly not a light-touch regulation; it is very strict.”

Mandatory Licensing for Crypto Firms

The law applies to:

• Exchanges
• NFT marketplaces
• Crypto custody providers
• Initial coin offerings (ICO)

Additionally, banks can obtain licenses to offer crypto custody and exchange services.

The VFSC clarified that stablecoins, tokenized securities, and central bank digital currencies (CBDCs) are not affected by the law.

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This move aligns with the Trump administration’s shift in crypto regulation, following similar case dismissals for Coinbase, Robinhood, Uniswap Labs, and OpenSea.

SEC Ends Investigation Into Web3 Gaming Platform Immutable

Immutable, an Ethereum-based gaming platform, also saw its SEC probe closed after a five-month investigation into its IMX token. No enforcement action was taken.

A Shift in SEC’s Crypto Policy

After dropping its Coinbase case, SEC acting chairman Mark T. Uyeda stated that these dismissals reflect the agency’s ongoing efforts to rectify its approach and create more transparent crypto policies.

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However, SEC clarified that these dismissals do not set a precedent for other cases.

Kraken welcomed the decision, calling it “the end of a wasteful, politically motivated campaign,” and hinted at potential IPO plans, making it the second publicly listed crypto company after Coinbase.

The SEC crypto task force announced four new roundtable discussions on digital asset regulations, set to run between April and June 2025. Task force leader Hester Peirce emphasized the importance of industry expert discussions in shaping policy.

SEC Charges Against Kraken, ConsenSys, Cumberland DRW, and Crypto.com

• Kraken was sued in November 2023 for operating as an unregistered securities exchange, broker, and clearing agency.
• ConsenSys faced legal action in June 2024 over its MetaMask Staking service, allegedly offering unregistered securities.
• Cumberland DRW, a Chicago-based trading firm, was accused in October 2024 of acting as an unregistered dealer, handling over $2 billion in crypto assets.
• Crypto.com was also cleared of any wrongdoing as SEC officially closed its investigation.

Under acting chairman Uyeda, SEC has taken a more collaborative approach, signaling a departure from strict enforcement policies.

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Trump Administration and Crypto Policies

Since taking office, Trump and Republican lawmakers have introduced discussions on digital asset regulations, banning central bank digital currencies, and establishing a strategic crypto reserve. Under Trump’s leadership, the SEC has dropped investigations into many crypto firms.

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Who Will Attend the Summit?

Alongside Trump, notable figures such as Ripple CEO Brad Garlinghouse, MicroStrategy Chairman Michael Saylor, Chainlink Co-Founder Sergey Nazarov, Exodus CEO JP Richardson, and crypto advisor Bo Hines will attend the event. Coinbase CEO Brian Armstrong, Gemini founders Cameron and Tyler Winklevoss, and Kraken founder Jesse Powell are also expected to join.

This summit marks the first major gathering of digital asset leaders at the White House. However, the official agenda for the meeting has yet to be announced.

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According to Fox Business reporter Eleanor Terrett, Tether has been collaborating with Bryan Steil, chairman of the House Financial Services Committee’s Subcommittee on Digital Assets, and French Hill regarding the STABLE Act, introduced on February 6.

Additionally, Tether CEO Paolo Ardoino stated that the company is also providing input on two other stablecoin bills introduced by other lawmakers. Ardoino commented:

“We are not going to just throw in the towel and let Tether die just for the sake of not adapting to U.S. legislation. But there is still a lot of uncertainty over what’s actually going to happen, and we want our voice to be heard in the legislative process.”

Can Tether Adapt to U.S. Regulations?

If Tether agrees to fully comply with U.S. regulations, it will be required to:

• Conduct monthly reserve audits via a U.S.-based accounting firm.
• Maintain 1:1 asset collateral for its tokenized fiat equivalents.

These changes in the regulatory landscape come at a time when executives in the crypto industry are meeting with the Securities and Exchange Commission (SEC) to discuss issues affecting the sector. Additionally, the Trump administration is calling for stablecoins to be brought onshore to strengthen the U.S. dollar’s global dominance.

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Federal Reserve and Stablecoins

In a February 6 interview, Federal Reserve Governor Christopher Waller stated that U.S.-pegged stablecoins would help broaden the reach of the dollar and make it an even more dominant global reserve currency:

“Stablecoins will broaden the reach of the dollar across the globe and make it even more of a reserve currency than it is now.”

Tether and other stablecoin issuers are among the largest buyers of U.S. government debt. These firms use government securities to overcollateralize their fiat-backed tokens, driving demand for the U.S. dollar and helping preserve its status as the global reserve currency.

However, Waller also expressed concerns about risks associated with stablecoins, such as:

• De-pegging events, where stablecoins may lose their fixed value against the dollar.
• The fragmentation of the stablecoin ecosystem, with multiple stablecoins operating in parallel and creating systemic risks.

Nonetheless, Waller emphasized that both banks and non-banks should be allowed to issue their own stablecoins and work with state regulators to ensure compliance with existing regulations.

Tether is actively working to ensure its compliance with U.S. regulations, allowing it to maintain its strong position in the stablecoin market. While the outcome remains uncertain, its influence in the crypto ecosystem is likely to continue.

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Additionally, one of the senior lawyers from the team has been removed from the SEC’s enforcement division. According to sources, some employees view this move as an unfair demotion. An SEC spokesperson declined to comment on the matter.

Is a Softer Approach to Crypto Coming?

This development comes just after SEC Commissioner Hester Peirce outlined a new regulatory approach to the crypto markets. Peirce stated that the SEC had previously taken an overly aggressive stance on crypto enforcement and suggested that “retroactive relief” might be provided for certain token sales.

Last year, the SEC filed 33 crypto-related enforcement actions, targeting 90 defendants and respondents.

Are SEC Policies Changing Under the Trump Administration?

These recent changes are part of a broader leadership shake-up that has accelerated since U.S. President Donald Trump took office on January 20.

In October 2024, the SEC’s chief enforcement officer, Gurbir Grewal, stepped down. His replacement, Sanjay Wadhwa, left the agency just months later on January 31.

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Meanwhile, former SEC Chair Gary Gensler resigned on January 20. These shifts have fueled speculation that the SEC may adopt a more lenient stance on crypto regulation.

What’s Next for SEC’s Crypto Policy?

The SEC’s latest moves have sparked significant debate in the crypto space. With expectations rising for a less aggressive regulatory approach, investors are closely watching how the agency will shape its future policies.

Uncertainty continues in the crypto world, and the SEC’s next steps remain highly anticipated.

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Said TD Cowen, Managing Director of the Washington Research Group, Financial Services, Jaret Seiberg, the political impasse in the form of the Bitcoin market bill FIT21 and the Senate Agriculture Committee bill increases the risk.

“We see hope as misguided since we think voting prospects for each item are declining this year.” Seiberg wrote in a research report Monday, “We are also pessimistic about next year, regardless of the election. And there is a rising chance that the bills could get stalled politically next year. This is so because both sides will desire greater contributions before they can eventually benefit the sector.”

Seiberg pointed out that this may occur even among the crypto community, “aggressively making political contributions.” With the crypto-focused Fairshake PAC also generating $95 million in donations, he referenced recent research by the nonprofit organization Public Citizen showing $119 million—rroughly 48% of corporate political contributions—were contributed by crypto businesses this year.

The Financial Innovation and Technology for the 21st Century Act (FIT21), which aims to generally control the cryptocurrency sector and would let the Commodity Futures Trading Commission over crypto assets, was passed by the U.S. House of Representatives in May 2022.

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