Introduction

The digital asset landscape has undergone a dramatic transformation over the past year, marking what many consider a pivotal moment in cryptocurrency regulation. After years of aggressive enforcement actions and regulatory uncertainty, 2025 has ushered in a new chapter characterized by the SEC's voluntary dismissal of numerous high-profile cases, the rescission of controversial guidance, and a more collaborative approach to industry engagement.

This shift represents more than just a change in enforcement philosophy—it reflects the maturation of an asset class that has moved from the fringes of finance to the mainstream. Yet beneath this evolving regulatory surface lies a complex web of legal considerations that continue to challenge even the most sophisticated market participants. The fundamental questions of securities law classification, compliance frameworks, and regulatory reporting requirements remain as critical as ever, particularly as new products like DeFi protocols, liquid staking derivatives, and tokenized real-world assets push the boundaries of existing regulatory frameworks.

In this comprehensive Q&A series, we sit down with Scott Kimpel, Partner at Hunton Andrews Kurth, to explore three fundamental areas that define the current state of digital asset regulation. From the evolution of SEC enforcement strategy and its implications for crypto companies, to the practical application of securities law frameworks for emerging products, and the new compliance challenges posed by enhanced reporting requirements, these discussions provide essential guidance for navigating today's regulatory environment.

Drawing from his experience as former SEC counsel and his current leadership of Hunton's blockchain working group, Scott offers practical insights for companies, investment advisers, and legal practitioners working to understand and adapt to the rapidly changing regulatory landscape. While the legal foundations established over the past decade remain largely intact, the application and enforcement of these rules continues to evolve, creating both opportunities and challenges for industry participants.

As Congress considers legislation like the CLARITY Act that could further reshape the regulatory framework, and as the statute of limitations on past enforcement actions continues to tick, understanding these dynamics has never been more crucial for success in the digital asset space.

1. Drawing from your experience as former SEC counsel and your current leadership of Hunton's blockchain working group, how has the SEC's enforcement approach toward digital assets evolved since you served at the Commission? What shifts in enforcement philosophy and strategy should crypto companies anticipate under the current administration?

There has been a natural evolution at the SEC as digital assets have become more mainstream. After bitcoin was introduced in 2009, the SEC’s initial focus was on Ponzi schemes and other frauds purporting to involve the then-new asset class. As more projects began minting their own digital assets, the SEC’s attention shifted to assessing whether those assets were securities under federal law, and if so, whether the issuer had complied with SEC regulations regarding the offer and sale of securities. With the introduction of intermediaries, the SEC also began scrutinizing their registration as brokers, dealers and exchanges. While the SEC issued some guidance for the digital asset industry, the agency’s Depression-era statutes were often poorly calibrated when applied to the new asset class, and interpretive questions grew exponentially.

A period of aggressive enforcement litigation followed, and the SEC brought well over 100 cases against the digital asset industry. Many cases did not allege fraud but instead centered on technical registration or compliance violations. Because there was often no practical path to register fully with the SEC, many developers took their products offshore or excluded US residents from participating. Others stood their ground and engaged in costly litigation with the SEC.

In 2025 we have witnessed a marked shift in the SEC’s perception of, and approach to, the industry. The agency has voluntarily dismissed numerous high-profile enforcement cases against digital asset sponsors and intermediaries, rescinded controversial staff guidance that was unfavorable to the digital asset industry, and launched a series of townhall-style meetings to seek public input on future rulemaking. The SEC staff has also issued a number of helpful guidance documents on topics such as staking, custody and offerings. Congress recently passed the GENIUS Act, which clarifies the status of payment stablecoins under the federal securities laws, and the pending CLARITY Act would further define the parameters of the SEC’s jurisdiction over digital assets.

Although I expect to see fewer enforcement cases alleging violations of registration or compliance requirements involving digital assets for the next few years, the SEC remains concerned about fraud and other harm to retail investors. I don’t foresee a slowdown in the SEC’s initiation of fraud cases. It’s a bit counterintuitive, but even if a particular asset is outside the SEC’s jurisdiction, a plan to raise funds fraudulently to acquire that same asset is in scope. The SEC is not likely to cede ground on those kinds of cases. Finally, it’s worth keeping in mind that the statute of limitations applicable to most SEC cases is five years, so the next change in presidential administrations may once again mean a change in enforcements philosophy at the SEC.

2. Given your extensive work on securities law compliance, how should companies evaluate whether new crypto products like DeFi protocols, liquid staking derivatives, or tokenized real-world assets fall under securities regulations? What practical frameworks do you recommend for conducting Howey test analysis in these evolving contexts?

Despite the SEC’s recent shift in its approach to the digital asset industry, the underlying law has not changed much, with the exception of the treatment of payment stablecoins under the GENIUS Act, and that statute is not immediately effective. Although the SEC recently dismissed a series of high-profile cases involving digital assets, courts had previously had occasion to rule on a variety of issues regarding the treatment of digital assets under the federal securities laws. Precedent from those previous cases remains on the books, and even if the SEC has slowed its litigation efforts, private plaintiffs and some state securities regulators remain active litigants. Unless and until Congress passes the CLARITY Act or similar legislation to reimagine Howey as applied to digital assets, Howey remains good law, and the investment contract analysis remains critical. Beyond Howey, issuers of the next generation of digital products must also consider whether they have created a swap subject to SEC or CFTC oversight and additional limitations on sale.

As far as Howey in the context of digital assets is concerned, much has been written on the subject over the past ten years. The SEC’s 2018 guidance on digital assets, though intended to be helpful, created so many subparts to the four-part Howey test as to be counterproductive in many scenarios. Many of the judicial cases I alluded to earlier also had an opportunity to consider the issue, and while many courts often reached the same conclusion, some did not.

At the end of the day, the totality of the circumstances must be considered. As the courts currently interpret the Howey standard in the context of digital assets, a central inquiry is whether the project is intended as a financing effort that seeks funds from passive investors who are not able to exert meaningful control over the project. The myriad of other factors must also be considered, of course, but the participation of passive investors during a project’s early stages is frequently the inflection point.

3. With the SEC and CFTC's proposed amendments to Form PF requiring digital asset reporting, what compliance strategies should investment advisers implement? How do you advise clients on navigating the intersection of traditional securities reporting requirements and the unique characteristics of digital asset investments?

The SEC and CFTC adopted these reporting requirements in February 2024, and have now delayed compliance until October 2025. Under the new requirements, some registered investment advisers will be required to report on digital asset holdings as well as digital asset investment strategies. Although the SEC originally proposed to define digital assets for purposes of Form PF reporting, it ultimately chose not to. The SEC did, however, specify that if a particular asset could be classified as both a digital asset and another asset, an adviser should report the asset as a non-digital asset. As an example, the SEC staff referenced a money market fund that is traded on a blockchain. The Form PF instructions also make the same distinction between digital asset strategies and non-digital asset strategies. Further, Form PF is clear that digital assets should not be categorized as cash or cash equivalents. As investment advisers build compliance systems to track and report on the new Form PF requirements, ultimately the classification of a digital asset should be based on the adviser’s reasonable judgment.