Will Other States Follow in California's Footsteps Regarding Cryptocurrency Regulation?

Technology and Innovation Partner Joe Dewey spoke with the Daily Business Review about the outlook for cryptocurrency regulation and litigation. Both states and the federal government are paying more attention to the crypto industry and taking steps to regulate crypto assets. For example, California Gov. Gavin Newsom recently signed an executive order related to crypto, and the U.S. Department of Justice created a specialized crypto enforcement team. However, Congress has not passed any crypto-related laws, and Mr. Dewey explained that most regulation currently arises from enforcement actions by federal agencies, such as the U.S. Securities and Exchange Commission. He also described the crypto-related litigation he currently sees, adding that absent federal legislation, litigation will continue to come from agency enforcement actions as well as private class actions.

"Without action by Congress, future regulation may also be the subject of challenges around whether agency action fell within the scope of its authority from Congress," he explained. "Recent lawsuits filed against decentralized autonomous organizations or DAOs will test new theories of liability around DAOs, including whether they are properly treated as general partnerships; and hence, whether all of the DAO holders are jointly and severally liable for the acts and omissions of a DAO."

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