MoFo's Financial Markets & Innovation

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 crypto market infrastructure, stablecoin legislation, prediction markets, artificial intelligence policy, and CFTC regulatory priorities, this update highlights key regulatory actions, enforcement leadership changes, litigation outcomes, and policy signals affecting digital asset and financial technology market structure.

Kraken Becomes First Crypto Firm to Gain Fed Approval for Master Account

Kraken, a crypto payments company, announced on March 4 that its banking unit, Kraken Financial, has been granted a Federal Reserve master account. This gives Kraken Financial direct access to the Fed’s core payments system, making the Wyoming-chartered bank the first digital asset bank to be able to move money on the rails used by banks and credit unions. Kraken said the master account will allow Kraken Financial to handle transactions without needing to rely on intermediary banks.

State Lawmakers Send Letter on AI to Trump Administration

On March 3, over 50 Republican state lawmakers sent a letter to President Trump expressing their concern on the administration’s treatment of state AI laws. Specifically, they point out that their state laws support the “conservative principles and with [Trump’s] state goals of promoting human flourishing while accelerating innovation.” The lawmakers point towards the “real and growing harms” in AI systems and the states’ responsibility to enact laws. They also discuss the Trump Administration’s concern over inconsistent regulations, saying that they are ready to work with federal officials where appropriate.

CFTC Chairman Selig Remarks at Milken Institute Future of Finance

On March 3, CFTC Chairman Michael Selig spoke at the Milken Institute Future of Finance 2026 conference on the topic of modernizing market regulation. According to press reports, Selig said the CFTC plans to create a framework to allow perpetual futures contracts for cryptocurrencies in the U.S. within “the next month or so.” Such contracts allow traders to hold leveraged positions on crypto prices indefinitely with no expiration date. Currently, this trading instrument exists mostly on offshore exchanges. Selig said the agency’s goal is to recapture liquidity that has migrated to platforms outside the U.S., and that the agency will continue to work with the SEC as part of Project Crypto, a joint initiative to align federal oversight of digital assets.

Congressmen Criticize Trades on Prediction Market Trades on War

On February 28, Senator Chris Murphy announced his intention to introduce legislation to ban insider trading on prediction markets after news surfaced of suspected insiders betting on the U.S. strike in Iran. Previously, Murphy had raised concerns with prediction markets and betting on the war in Gaza. In a post on X, Murphy clarified that he is “working on legislation to ban corrupt and destabilizing prediction markets”. Representative Mike Levin also posted his concerns on X regarding insider trading on the Iran strikes. In response, the founder of a large prediction market posted that the concerns of Sen. Murphy were only relevant to unregulated, offshore markets.

Clarity Act Update: March 1 Deadline Passes, Trump Supports Stablecoin Yield

As the White House March 1 deadline for the Clarity Act negotiations passes, stakeholders in the cryptocurrency and bank industries are still debating stablecoin yield. However, President Trump threw his support behind the digital asset industry in a post on Truth Social, saying the “The Genius Act is being threatened and undermined by the Banks,” and that “[t]hey need to make a good deal with the Crypto Industry.” Details are unclear as to whether the President’s support will sway Congress on the Clarity Act.

Uniswap Labs Crypto Exchange Spared From ‘Scam Token’ Lawsuit

On March 2, the U.S. District Court for the Southern District of New York permanently dismissed a lawsuit against cryptocurrency exchange Universal Navigation Inc., doing business as Uniswap Labs, and its CEO, Hayden Adams, which was brought by investors alleging that they lost money on “scam tokens” issued and traded on the company’s platform. The identities of the issuers of the scam tokens were unknown, so the plaintiffs sought to hold Uniswap liable under various state laws. The court held that the plaintiffs failed to sufficiently connect the acts of Uniswap and Adams to their alleged injuries and failed to allege plausible claims. In addition, the court held that the plaintiffs failed to allege that Uniswap and Adams had "actual knowledge" of the alleged fraud, and did not adequately allege that the defendants "substantially assisted" the issuers’ frauds. An earlier case alleging federal securities law violations also failed.

CFTC Chairman Selig Announces David Miller as Director of Enforcement

On March 2, CFTC Chairman Michael Selig announced that David Miller will serve as the agency’s Director of Enforcement. Miller is joining the CFTC from private practice, where he focused on white-collar defense, government and internal investigations, commodities and securities enforcement, complex civil litigation, digital asset enforcement and regulatory matters, and national security issues. Previously, Miller served as an assistant U.S. attorney in the Southern District of New York, including as a member of the Securities and Commodities Fraud Task Force. He also served as a terrorism prosecutor with the Justice Department, a special assistant U.S. attorney in the Eastern District of Virginia, and an assistant general counsel for the CIA.