Lowenstein Crypto advises leading digital asset and cryptocurrency projects, exchanges, and trading firms. Our practice covers regulatory advice, transactions and structuring advice, investigations, and adversarial matters including commercial disputes, bankruptcy, and related litigation. As these markets continue their rapid growth and market participants continue to evolve and mature their businesses, we are providing this weekly digest as a resource that highlights and summarizes a selection of key recent legal regulatory developments.

SEC Staff Publishes FAQ on Innovation Exemption for Tokenized Securities Trading 

On October 21, the Securities and Exchange Commission’s (SEC or Commission) Division of Trading and Markets published an FAQ concerning the Commission’s “Innovation Exemption,” a September 17, 2026 order granting a conditional five-year exemptive relief from the definitions of “exchange” and “dealer” under the Securities Exchange Act of 1934 to certain tokenized securities venues (TSVs) and liquidity providers engaged in trading tokenized National Market System (NMS) stocks. The FAQ clarifies requirements concerning public notices and issuer objections. Under the Innovation Exemption, a TSV must publish a notice describing its operations and access standards on its publicly available website at least 30 calendar days before commencing operations. The FAQ provides that TSVs should publish this notice only after operations and access standards are established and ready for production. The FAQ further clarifies that a TSV may identify tokenized NMS stocks subject to a pending 30-calendar-day issuer-objection period in its public notice. However, a TSV may not make those securities available for trading until the issuer-objection period has expired without a timely objection. If an issuer objects within the prescribed period, the TSV must update its public notice to reflect the objection and cannot make the affected securities available for trading under the exemption. The FAQ also directs market participants to the SEC’s published list of persons that have notified the Commission of their intent to operate under the TSV exemption and provides contact information for submitting questions, comments, and required notices. See the FAQ here and see the order here.

OCC Finalizes GENIUS Act Stablecoin Rule

On October 21, the Office of the Comptroller of the Currency (OCC) issued a final rule implementing the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The rule sets requirements for permitted payment stablecoin issuers, foreign payment stablecoin issuers under the OCC’s jurisdiction, and certain custody activities of OCC-supervised entities. The final rule includes relaxed scrutiny of certain stablecoin yield and interest agreements when compared to the proposed rule. It also relaxes procedures for mass redemption and “spike” extensions in response to comments that an automatic seven-day extension during such events would increase the risk of a run. Where the proposed rule offered either a flexible diversification and liquidity requirement with an optional safe harbor provision or a mandatory requirement, the final rule adopts the former. The final rule also narrows the definition of “customer” to direct counterparties in order to limit exposure to secondary-market token holders but includes a heightened definition of “tokenized asset.” The rule does not cover everything the GENIUS Act requires the OCC to issue; the OCC will release additional rulemaking on anti-money-laundering (AML), Bank Secrecy Act (BSA), and Office of Foreign Assets Control sanctions rules in coordination with the U.S. Treasury. The rule and the GENIUS Act take effect January 18, 2027. Prospective issuers, banks offering digital asset custody, and their partners should now assess their reserve, redemption, and custody practices against the final rule; prepare license applications; and track the forthcoming BSA/AML rules and the OCC’s application-intake announcement. See the press release here.

OCC Issues Guidance on GENIUS Act Waivers and Application Procedures and Issues Revised Reporting Forms for Certain Stablecoin Issuers

On October 21, the OCC issued guidance clarifying application and waiver procedures under the GENIUS Act, which generally requires payment stablecoin issuers to obtain regulatory approval before issuing payment stablecoins in the United States, beginning January 18, 2027. Under the guidance, existing issuers operating in the United States with substantially complete applications pending before the OCC as of January 18, 2027, may request temporary waivers of certain statutory or regulatory requirements for up to 12 months. The OCC indicated that it generally expects to grant waivers of the prior-approval requirement for qualifying existing issuers, absent compelling reasons for denial, but has not identified similarly compelling generally applicable grounds for waiving other requirements. Waiver requests will be evaluated individually, with the OCC generally expecting to act by January 18, 2027. The OCC also announced that it will begin accepting applications and waiver requests following approval of the relevant information collection by the Office of Management and Budget and will separately announce when submissions may begin. The OCC issued an additional bulletin on the revised reporting forms that are required for certain permitted payment stablecoin issuers and foreign payment stablecoin issuers under the GENIUS Act. See the bulletin on waivers and applications here. See the bulletin on revised reporting forms here.

New York Attorney General Files Comment Letter to SEC Requesting Withdrawal of Proposed Regulation Crypto Assets 

On October 20, the New York Attorney General’s office (NYAG) filed a comment letter with the SEC in opposition to the proposed Regulation Crypto Assets (Regulation CA), which the SEC issued on August 18, and asked the SEC to withdraw it entirely. The NYAG argues that Regulation CA goes beyond the SEC’s exemptive authority under the Securities Act and the Exchange Act because it is neither in the public interest nor consistent with investor protection. The NYAG objects that Regulation CA combines broad retail access, general solicitation, and immediately transferable securities while leaving out standard safeguards such as registered intermediaries, market surveillance, individual investment limits, and financial statement disclosure. In particular, the NYAG criticizes the $5 million “startup exemption,” which requires no financial statements, lets disclosures be posted on a website instead of SEC’s EDGAR system, does not require beneficial-ownership disclosure, and is open to foreign issuers, individuals, and unincorporated groups. The NYAG further argues that the investment contract safe harbor “upends” the Howey test in two ways. First, it excludes network maintenance and “facilitat[ing] network effects” from “essential managerial efforts.” Second, it lets issuers decide for themselves, through a Form TR that takes effect on filing without SEC review, when a token stops being a security, which could let failed projects raising up to $75 million stop reporting. See the NYAG’s comment letter here.

UK and Singapore Deepen Cooperation on Digital Assets and Tokenization

On October 20, the Monetary Authority of Singapore (MAS) and His Majesty’s Treasury announced that the United Kingdom and Singapore held their 11th UK-Singapore Financial Dialogue, during which officials discussed cooperation on digital assets and financial market infrastructure. Discussions covered initiatives supporting tokenization and wholesale digital markets, including Singapore’s Project Guardian, BLOOM, and Global Layer One initiatives; the UK’s Wholesale Financial Markets Digital Strategy and Digital Securities Sandbox; and related work by the Bank of England and Financial Conduct Authority. Officials also discussed developments in crypto-assets and stablecoins, including the implications of digital money for wholesale financial markets and institutional settlement. Although the dialogue reflected the continuing regulatory cooperation between the two jurisdictions, the announcement did not identify new binding requirements, a joint regulatory framework, or a specific implementation timeline. The UK will host the 12th UK-Singapore Financial Dialogue in 2027. See the press release here.