Your legal update for May 28

gm from the Day One Law team! This week’s legal update includes:

Let’s quickly discuss.

1/3: Latest on Stablecoin Legislation as Circle Files for IPO

Two weeks after Senate Democrats united to oppose the GENIUS Act, a bipartisan Senate vote in late May approved a motion to advance the Act to the Senate floor. Multiple Senators changed their position and agreed to approve the motion after an agreement was reached over key sticking points for Democrats. Changes to the Act, which is co-sponsored by a group of Republicans and Democrats, include: 

• Restrictions on stablecoin issuance from public tech companies like Meta

• Revised anti-money laundering provisions that align with requirements on banks

• Priority to be given to stablecoin holders if an issuer files for bankruptcy

• Foreign issuers (e.g. Tether) may operate under a comparable regulatory regime if they have the technological capability to comply with lawful orders

The full list of changes was shared by Punchbowl News. 

The GENIUS Act now needs a simple majority in its final vote. If passed, the Act will become the first comprehensive federal regulatory framework for stablecoins.

Meanwhile, stablecoin giant Circle disclosed plans to proceed with an IPO on the NYSE, which they initially filed an S-1 for in early April. Their amended S-1 filing states that they will offer 24 million shares under the symbol CRCL at a projected price of $24–$26 per share, targeting a valuation near $6 billion. Their S-1 also includes a statement that they “are hopeful that a comprehensive U.S. federal-level regulatory framework for stablecoins will emerge in the near term,” and cites the progress of the GENIUS and STABLE Acts as evidence.

You should know: Stablecoins remain at the center of regulatory and market attention. Whether the GENIUS Act passes or not, the emerging legislative frameworks are set to reshape the way crypto projects are structured and launched in the U.S. These bills aren’t just about the issuers: they affect every protocol that integrates stablecoins into its ecosystem, from payments and lending to AMMs and staking designs. Founders should start mapping their reliance on centralized stablecoins and identifying migration risks and control points now.

2/3: The SEC Charges Unicoin, Executives with $100M Fraud

On May 20, the SEC charged Unicoin and multiple key executives with orchestrating a $100M offering fraud targeting over 5,000 investors. Per the SEC’s 77-page complaint, the fraud involved:

• False claims of asset-backed tokens

• Fraudulent fundraising figures 

• Misleading regulatory and media communications

According to the complaint, investors in Unicoin were told that the project’s tokens were backed by “billions of dollars in real estate and equity interest in promising pre-IPO companies,” when in reality the company’s assets were “never worth more than a small fraction” of the values Unicoin was attributing to them. Unicoin also never took title of property they claimed to have acquired. 

Certain of Unicoin’s communications are cited by the SEC in their complaint, including:

• Unicoin overstated its sales of tokens to give the illusion of investor interest through statements on social media, during speaking engagements and via paid advertisements

•  Unicoin falsely promoted its tokens as “SEC-registered” and “regulations-compliant,” despite never filing with the SEC and selling unregistered securities in violation of federal law

• Executives knowingly misled investors through high-profile marketing campaigns in Times Square and major airports, as well as with paid interviews framed as news, while internally acknowledging the token was not asset-backed

Unicoin had received a Wells Notice near the conclusion of the SEC’s Gensler administration. It’s notable that the new administration is willing to continue the case, despite a broader shift in the regulation-by-enforcement approach. 

You should know: The SEC’s enforcement agenda hasn’t slowed under new leadership. It’s evolving. The recent Unicoin complaint is a clear signal that post-Gensler enforcement will likely sharpen focus on traditional fraud: misstatements to investors, fake asset backing, inflated fundraising figures, and misleading public promotions. This aligns with what many in the industry have long said enforcement should focus on. Founders need to scrutinize how they market, especially when engaging KOLs or influencers, and ensure investor materials are accurate and not misleading.

3/3: The Future of Non-Custodial Trading

Day One’s Nima Maleki contributed to an SEC submission addressing one of crypto law’s most important matters: Ensuring non-custodial trading interfaces are not classified as brokers or exchanges under U.S. federal securities law.

Brandon Ferrick authored the submission, which explains to the SEC why certain software providers for DeFi protocols should not require registration under the Securities Exchange Act of 1934. It draws from legal precedent to argue that mere technical facilitation and information display do not constitute regulated intermediation, as these programs allow individuals to interact with smart contracts without taking custody of user funds or making decisions on their behalf.

The future of DeFi would be at risk if the SEC were to classify these software providers as brokers or exchanges and impose compliance burdens. That would likely make it infeasible for current websites and applications that allow users to interact with DeFi to continue to operate without substantial changes.

The letter argues that these interfaces are not “brokers” or “exchanges” under U.S. securities law as long as they do not:

• Take custody of user assets

• Solicit or negotiate terms for user orders

• Provide personalized investment advice

If the front-end is just a UI to help users interact with smart contracts, the submission argues that the software provider should not be required to register with the SEC. Read the full submission here. 

You should know: Not all frontends are the same, and regulators know it (or will soon). We’re seeing growing regulatory attention to the separation between permissionless protocols and the software interfaces that route user activity to them. This recent SEC submission emphasized how some frontends merely display data or organize transactions, while others cross into advisory, routing, or solicitation territory. Expect future legislative and enforcement focus on this distinction. Founders should evaluate the functionality of any frontend they control or influence, and consider how cleanly they separate protocol logic from UX-layer decision-making.

As always, please reach out if you have questions about how the above relates to your ongoing work.

Talk soon.

Nick Pullman
Day One Law

This article is for informational purposes only and is not legal advice. Please consult with an attorney at Day One Law Corp regarding your specific situation.