SPACE CRYPTO

SEC settles lawsuit with Coinbase over lost internal messages The U.S. Securities and Exchange Commission has agreed to pay $150,000 in legal fees to close a two-year lawsuit with Coinbase, after the exchange requested the release of internal documents to prove that the SEC regulates crypto through enforcement rather than clear rules. The lawsuit is linked to the SEC losing nearly a year's worth of messages from former Chairman Gary Gensler. Coinbase General Counsel Paul Grewal stated this is the company's latest legal victory under the SEC leadership of Paul Atkins, following the agency's withdrawal of numerous enforcement actions targeting the crypto industry in 2025.

A group of pro-crypto Democratic Senators said they are not satisfied with the current draft of the CLARITY Act. They want to strengthen provisions on public ethics, consumer protection, anti-money laundering, conflicts of interest, and market transparency. However, this group affirmed they are still negotiating in "good faith" with the Republicans and will continue working to get the crypto market structure bill passed. This means CLARITY still does not have the necessary support to reach the 60-vote threshold in the Senate, but negotiations are still ongoing.

⚖️📖 The new CLARITY bill draft is available. Notable changes include: 1- Stricter ethics regulations for officials: The President, Vice President, members of Congress, federal judges, and their spouses will be prohibited from issuing or endorsing tokens for compensation while in office. They must also sell their crypto assets or transfer them into an independent blind trust. However, this provision is only effective until 1/20/2029 and remains a point of contention between the two parties. 2- Protection for DeFi and blockchain developers: The bill retains the content of the Blockchain Regulatory Certainty Act (BRCA), affirming that developers of non-custodial wallets, blockchain software, validators, or blockchain infrastructure providers will not be considered money transmitters simply for building or maintaining a decentralized network. However, those who intentionally support illegal activities will still face criminal liability. 3- Protection of self-custody rights: Users retain the right to self-custody their Bitcoin and crypto instead of being forced to deposit them on exchanges or with custodial organizations. 4- Stablecoins still cannot pay interest like banks: Companies are prohibited from paying interest on stablecoins simply because users keep idle funds in their accounts. However, they may still offer rewards tied to actual activity such as trading or staking, provided these rewards do not equate to bank deposit interest rates. 5- Increased powers for law enforcement: The bill adds budget for crypto-related investigations, trains law enforcement personnel, establishes a cybercrime center, and requires stablecoin issuers to comply with legal orders to freeze, seize, burn, or reissue tokens when necessary. 6- Protection of customer assets in case of exchange bankruptcy: Customer crypto will be classified as customer property rather than company assets during bankruptcy proceedings. This aims to prevent a recurrence of issues similar to those experienced with FTX. In summary, this is generally a positive development; however, this is not yet official law. The bill still requires consensus from both parties, approval by the Senate, reconciliation with the House version, and the President's signature before it can take effect.