Please see below for this week’s Financial Markets & Innovation Weekly Update from Morrison Foerster, tracking how digital asset firms, regulators, and policymakers are shaping the future of financial markets. Covering developments across SEC enforcement activity, Treasury illicit finance policy, CFTC oversight of prediction markets, stablecoin regulation, institutional crypto adoption, and interagency coordination, this update highlights key settlement activity, legislative momentum, litigation outcomes, and regulatory alignment shaping digital asset and financial technology market structure.
On March 5, Justin Sun and the SEC reached a $10 million settlement to resolve an enforcement action over trading activity, as well as the activities of his companies, Tron Foundation, BitTorrent Foundation, and Rainberry. Though the case against Sun was filed during the Biden administration under former SEC Chair Gary Gensler, the Trump administration paused proceedings shortly after entering office. According to the SEC, Sun and his companies illegally distributed crypto assets and concealed payments to advertisers. A judge will need to approve the settlement.
On March 6, the Treasury Department released a report to Congress on illicit finance in digital assets, as required by the GENIUS Act, based on responses from its August 18, 2025 request for comment. The report discusses risk assessments, U.S. regulatory framework and innovation practices, AI, digital identity, blockchain monitoring, APIs, and decentralized finance. Treasury laid out its policy principles in the report, which include promoting responsible innovation for AML/CFT compliance, collaboration with stakeholders on technologies, and the coordination of requirements across the U.S. and international bodies.
On March 9, Senators Reed and Hickenlooper sent a letter to the head of the CFTC regarding insider trading and wagers on war within online prediction markets. Prompted by the recent conflicts in Venezuela and Iran, the senators point to national security risks and the potential for market manipulation by government officials to justify increased regulation and enforcement for events contracts platforms. The senators ask that the CFTC enforce a ban on events contracts relating to U.S. military operations.
On Friday, March 6, the Florida state Senate approved a bill that would establish a state stablecoin regulatory framework. The bill is intended to bring Florida’s regulations in line with federal rules for payment stablecoins following passage of the GENIUS Act. The bill would require stablecoin issuers in Florida to be licensed by the Florida Office of Financial Regulation. The bill is now headed to Governor Desantis’s desk for signature.
Charles Schwab is moving beyond ETFs and poised to offer direct cryptocurrency trading for Bitcoin and Ethereum, with a limited rollout expected in Q2 2026 and broader availability to follow, signaling the firm’s intent to capture client demand for consolidated digital asset access within its trusted brokerage platform. Schwab CEO Rick Wurster emphasized that despite recent market softness, sustained client interest in crypto and a growing engagement with Schwab’s offerings underpin the strategic expansion into digital assets.
In a significant regulatory development, the SEC and CFTC announced a Memorandum of Understanding to deepen coordination across oversight, enforcement, and policy for financial markets, including clearer frameworks for emerging technologies like crypto. The agreement aims to harmonize definitions, streamline reporting requirements, modernize clearing and margin practices, and eliminate duplicative rules that have historically hindered innovation, laying the groundwork for more seamless cross-agency oversight.
CFTC Chairman Michael S. Selig used his remarks at the FIA Boca Raton Global Cleared Markets Conference to outline a broad innovation and digital assets agenda, including upcoming guidance on CFTC intermediary registration requirements to decentralized finance, clearer oversight of crypto derivatives, and a formal rulemaking for event/prediction markets. He underscored the importance of regulatory clarity and active enforcement while noting enhanced coordination with the SEC as part of the industry’s evolving oversight landscape. Additionally, Selig discussed his intent to “future-proof” rules to avoid regulation through enforcement or staff guidance.
Mastercard has unveiled a new Crypto Partner Program bringing together more than 85 crypto-native firms, payment providers, and financial institutions to collaborate on the future of blockchain-powered payments and digital asset solutions. The initiative is designed to foster meaningful dialogue and joint innovation between Mastercard and partners like Binance, Circle, Gemini, PayPal, Ripple, Solana, and Polygon, among others, with a focus on translating on-chain innovation into scalable, compliant products and services that work seamlessly with Mastercard’s global payments infrastructure. This effort reflects a broader push to align digital asset capabilities with everyday commerce and accelerate practical use cases across markets as the digital ecosystem matures.
Cboe Global Markets is launching an innovative prediction markets framework that goes beyond traditional binary (yes/no) contracts by offering outcome-based instruments that include partial payouts, giving traders credit even when predictions are only partially correct. The initial product—an E-mini S&P 500 prediction market contract using an options wrapper and cash settlement—is slated for Q2 2026, reflecting a major step in evolving how markets express and monetize views on future events.
On March 6, a federal judge in Manhattan dismissed a civil lawsuit that sought to hold Binance and its founder Changpeng Zhao liable for alleged cryptocurrency transfers tied to 64 terrorist attacks, ruling that plaintiffs failed to plausibly link the defendants’ actions to the attacks. The ruling underscores challenges in applying U.S. terrorism financing law to crypto platforms and affirms that standard transactional relationships do not equate to culpability under current legal standards.
If you have any questions about these developments or would like to discuss how they may affect your business, please contact any of the partners listed.