July 10, 2025

Clients, Friends, and Associates:

As we close out the second quarter of what has been an eventful year for the digital asset sector, we would like to highlight several recent industry and firm developments that we believe will be of interest to many of our clients and colleagues. This update includes notable developments regarding the regulatory environment around digital assets specifically, as well as items that affect the securities and investment management industries more broadly. As always, our intention is to present an informative, brief overview of these topics. We are available should you have any questions on any of these items or related matters.

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CFM Items

CFM Hedge Funds Practice and Managing Partner Karl Cole-Frieman Each Receive Chambers Rankings. We are pleased to announce that CFM’s hedge funds practice has been recognized by Chambers as a Band 4 hedge funds practice among U.S. law firms, and Karl Cole-Frieman has been ranked within Band 5 among hedge funds attorneys nationwide. While the greatest accolades are those we receive from our clients, we are incredibly proud of the efforts and partnerships that have brought our hedge funds practice and Karl Cole-Frieman to a nationally recognized industry standing, a pivotal milestone in the firm’s continued growth trajectory.

CoinAlts Fund Symposium. CFM, along with industry leaders MG Stover, Harneys, and KPMG, is a premier sponsor of the CoinAlts Fund Symposium. This annual event, being held at the Four Seasons Hotel in San Francisco on October 29, 2025, is the anchor event of SF Fund Week 2025. It brings together the digital asset community to address investment, legal, and operational issues relevant to private fund managers. The conference is a must-attend gathering for industry professionals, providing unparalleled insights and networking opportunities. Join us for expert panels, top-notch speakers, and the chance to stay ahead of the curve in this rapidly evolving industry. More information is available at https://coinalts.xyz/.

CFM People. We are excited to welcome two outstanding additions to the CFM team. Kevin Leiske has joined the firm as a Partner, bringing with him a wealth of experience and deep industry insight that will further strengthen our practice. We are also pleased to introduce Ajwang Rading, who recently joined us as an Associate. Please join us in giving a warm welcome to Kevin and Ajwang!

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SEC Matters

Crypto Task Force Organized to Support the Development of Digital Asset Policy. The Securities and Exchange Commission (“SEC” or the “Commission”) announced it would bring together staff from the Chairman’s office and other divisions to find “workable solutions to difficult crypto regulatory problems.” The Crypto Task Force quickly went to work, hosting several roundtables on various topics such as Crypto Trading and DeFi. Additional roundtables are scheduled in the coming months. These meetings are open to the public and uploaded on YouTube for future viewers. The SEC’s expressed goal is to “draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.” Although the impact of these roundtables remains to be seen, it is clear that the SEC has pivoted to embrace the new administration’s view on crypto and regulation. Those interested in providing written input to the Crypto Task Force may do so via an online form.

SEC Statements on Digital Assets. The SEC’s Division of Corporation Finance recently issued four separate statements on digital assets covering Meme Coins, Stablecoins, Protocol Staking, and the offering and registration of securities in crypto asset markets in hopes of providing “clarity on the application of the federal securities laws to crypto assets.” Regarding Covered Stablecoins and Meme Coins, the Division has indicated that the purchase and sale of these assets do not qualify as the purchase or sale of securities under federal securities laws. Regarding Protocol Staking, the Division clarified its view that certain “staking” activities are not securities transactions within the scope of the federal securities laws. Regarding crypto asset registration requirements, the SEC provided guidance on Securities Act registration filings, such as Form S-1, Form 10, Form 20-F, and Form 1-A. The Division indicated that the guidance is being provided as a stopgap measure to support registrants while the Crypto Task Force is evaluating the SEC’s broader policies and framework for crypto assets.

SEC Announces Dismissal of Civil Enforcement Action Against Coinbase. The SEC announced in February that a joint stipulation was filed with Coinbase Inc. and Coinbase Global Inc. to dismiss the SEC’s civil enforcement action against both entities. In the accompanying press release, the SEC noted that it was time for the Commission to shift away from enforcement as regulation, and the SEC noted its decision to dismiss the case was due to renewed efforts to reform the regulatory approach to digital assets. Coinbase issued its own statement, noting that the SEC is “righting a major wrong.”

SEC Roundtable on Artificial Intelligence. The SEC hosted an artificial intelligence (“AI”) roundtable with an aim to redefine the Commission’s approach to understanding, defining, and implementing AI policy. Many participants at the roundtable emphasized the importance of taking a technology-neutral approach to AI and encouraged the Commission to avoid imposing barriers to the adoption of the technology. All sessions from this roundtable are available on YouTube.

SEC Formally Withdraws Fourteen Notices of Proposed Rulemaking. In June, the SEC formally withdrew fourteen notices of proposed rulemaking, including proposed rulemaking on topics such as cybersecurity risk management for investment advisers, predictive data analytics, safeguarding/custody of advisory client assets, best execution, and outsourcing by investment advisers. The SEC states that it does not intend to issue final rules with respect to these proposals, and that any future regulatory action in any of these areas would be accompanied by a newly proposed rule. The withdrawn rules were originally issued between March 2022 and November 2023, during the tenure of former SEC Chair Gary Gensler.

Compliance Date Extension for Investment Company Act “Names Rule.” The SEC announced a six-month extension for compliance with the “Names Rule,” which requires investment advisers to use names for their registered investment companies that align with the companies’ investment focus and risks. The large fund groups compliance date has been extended from December 11, 2025, to June 11, 2026, and the compliance date for smaller fund groups was extended from June 11, 2026, to December 11, 2026.

While the Names Rule pertains only to registered investment companies and not private funds, its upcoming implementation should serve as caution that an investment fund’s name may be viewed by regulators as having a strong impact on potential investors, making it important that a fund’s name accurately reflect the strategy/ies of the fund.

EDGAR Next Launched on March 24. As a reminder, and as mentioned in our 2025 Q1 Update, the enrollment portal will remain open until December 19, 2025. However, the SEC is requesting filers enroll no later than September 12, 2025, to avoid any interruptions. Additional information on enrolling and the new system can be found here.

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CFTC Matters

Acting Chair Pham Praises Justice Department Policy Changing Digital Asset Enforcement. The Acting Commodities Futures Trading Commission (“CFTC”) Chairman issued a statement regarding the importance of “holding bad actors accountable” when bringing digital asset-focused enforcement actions. He also noted regulators should focus on setting clear rules “that foster innovation.”In addition, Acting Chair Pham has instructed all CFTC employees to comply with the President’s executive order to stop referring regulatory prosecution to the Department of Justice. He believes that previous instances of using the Justice Department for regulatory prosecution have “undermined trust in the regulatory process and impeded American competitiveness,” and committed to seeing that all resources of the CFTC be directed towards ensuring “lawful governance.”

CFTC Staff Withdrew Multiple Advisory Statements to Clarify Staff Priorities. The CFTC withdrew three CFTC Staff Advisory letters:

• Staff Advisory No. 18-14, concerning listings of virtual currency derivative products, was withdrawn because the Division of Market Oversight and the Division of Clearing and Risk believe that the advisory is no longer needed due to robust standards and procedures implemented over the years for virtual currency and digital asset derivatives.

• CFTC Letter No. 21-19, concerning swap execution facility registration requirements, was withdrawn by the Division of Market Oversight due to the amount of regulatory uncertainty it was creating.

• Staff Advisory No. 23-07, concerning risks associated with derivative clearing organizations’ clearing of digital assets, was withdrawn by the Division of Clearing and Risk so that “it does not suggest that its regulatory treatment of digital asset derivatives will vary from its treatment of other products.”

CFTC Revamps Referrals to the Division of Enforcement. The CFTC’s Department of Enforcement (“DOE”) announced changes to how it was accepting referrals and provided guidance to present “registrants and registered entities with fair notice and greater transparency.” DOE had previously released an Enforcement Advisory on Self-Reporting, Cooperation, and Remediation, and the follow-up Staff Advisory includes specific criteria the staff should consider when making referrals to DOE. One key change is that registered entities can self-report violations to different CFTC Operating Divisions and receive credit for self-reporting instead of reporting directly to the DOE. The Operating Divisions will then evaluate the violations and aim to only refer material supervision issues or material non-compliance issues to the DOE. Other violations are expected be addressed directly by the Operating Division with the registrant or registered entity. The CFTC’s goal is to facilitate open and transparent engagement by registrants or registered entities with the Operating Divisions as well as to identify emerging issues, risks, or trends earlier.

CFTC Requests Comments on Perpetual Contracts in the Derivatives Market. In April, the CFTC issued a Request for Comment to help it better understand the characteristics of perpetual futures and other derivative contracts. TheCFTC is specifically seeking feedback on the use cases for the products, any opportunities these contracts might create, and the challenges or potential risks of using these products. Comments were accepted by the CFTC until the close of the comment period on May 23, 2025.

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Digital Asset Matters

Department of Justice Issues Memorandum on Changes to Digital Asset Enforcement. The Office of the Deputy Attorney General (“ODAG”) issued a memorandum signaling a departure from previous litigation and enforcement actions that were “weaponized against digital assets.” The priority shift follows Executive Order 14178, which tasks several offices with protecting and promoting blockchain networks and providing fair and open access to banking services. According to the memorandum, the Justice Department will no longer target any “virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or unwitting violations of regulations” unless these services explicitly victimize investors or use these services to further criminal offenses.

All ongoing investigations that do not meet that criteria will be closed, and the ODAG will review all cases to ensure they align with the new policy issued by the President. All rules that are contrary to the Executive Order will also be rescinded, and Department employees have been told not to charge regulatory violations in any cases where the Justice Department would need to determine whether a digital asset is a security or commodity. Although this is a dramatic shift in enforcement, companies and managers operating in the digital asset space should be wary of removing or stopping any compliance or risk assessments associated with their digital asset products. While the Justice Department is relaxing its enforcement stance vis-à-vis digital assets, digital asset investigations remain a priority for many state attorney general offices.

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Other Matters

FinCEN Final Rule Regarding AML/CFT Program and Suspicious Activity Report Filing Requirements for Certain Investment Advisers. As briefly noted in our 2024 End of Year Update, the Financial Crimes Enforcement Network (FinCEN) has issued its final rule expanding certain requirements under the Bank Secrecy Act (“BSA”) to most SEC-registered investment advisers and SEC exempt reporting advisers (the “Final Rule”).

Among other requirements, subject investment advisers will be required to:

• implement a risk-based and reasonably designed Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) program;
• file reports like the Suspicious Activity Report (SAR) with FinCEN;
• maintain recordkeeping of fund transfers, in compliance with the Recordkeeping and Travel Rules; and
• fulfill other obligations in compliance with the BSA and FinCEN’s implementing regulations, such as special information sharing procedures.

The SEC will be responsible for review and enforcement of the Final Rule. Subject investment advisers will have until the compliance date of January 1, 2026, to comply with the Final Rule’s requirements.

Form BE-180 Benchmark Survey for Certain Investment Advisers. The U.S. Bureau of Economic Analysis is conducting its Benchmark Survey of Financial Services Transactions Between U.S. Financial Services Providers and Foreign Persons, a survey of U.S.-based financial services providers that have effected financial services transactions with non-U.S. persons during their preceding (2024) fiscal year. This includes U.S.-based investment advisers with non-U.S. clients, funds, or service providers. Such advisers should complete and file the Form BE-180 by July 31, 2025.

British Virgin Islands (“BVI”) Implements Additional Information Compliance Form. In April, the British Virgin Islands International Tax Authority (“ITA”) updated their Financial Account Reporting System guide to include a new compliance form that allows the country to collect additional data of its users. This data will be used to determine the effectiveness of the Reporting Standards in the BVI.

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Compliance Calendar

As you plan your regulatory compliance timeline for the coming months, please keep the following dates in mind:

July 10, 2025

• Quarterly Form 13H Amendment. Filing is for the calendar quarter that ended June 30, 2025, and should be submitted within 10 days of quarter end if any material on the Form 13H became inaccurate.

July 15, 2025   

• Quarterly Form PF due for Large Liquidity Fund Advisers. Filing is for the calendar quarter that ended June 30, 2025.

July 31, 2025

• ERISA Schedule C of DOL Form 5500 Disclosure.

August 14, 2025

• Quarterly Form 13F Filing. Filing is for calendar quarter that ended June 30, 2025, and should be submitted within 45 days of quarter end.
• Schedule 13G Amendment. Filing is for the calendar quarter that ended June 30, 2025, and should be submitted within 45 days of quarter end if any material on the Form 13G became inaccurate.
• CTA Form PR. Filing is for calendar quarter that ended June 30, 2025, and should be submitted within 45 days of quarter end.

August 29, 2025

• Form PF for Large Hedge Fund Advisers. Filing is for the calendar quarter that ended June 30, 2025, and should be submitted within 60 days of quarter end. 
• CPO-PQR Form. Filing is for calendar quarter that ended June 30, 2025, and should be submitted within 60 days of quarter end. 
• Form N-PX Filing. This filing covers the 12-month period of July 1, 2024, through June 30, 2025.

January 1, 2026

• FinCEN Final Rule. Certain SEC-registered investment advisers and SEC exempt reporting advisers must implement AML/CFT compliance programs and other obligations under the Final Rule by January 1, 2026. 

Periodic

• Form D and Blue Sky Filings should be current.
• CPO/CTA Annual Questionnaires must be submitted annually, and promptly upon material information change, through the NFA Annual Questionnaire system.

Consult our complete Compliance Calendar for all 2025 critical dates as you plan your regulatory compliance timeline for the year.

Please contact us with any questions or assistance regarding compliance, registration, or planning issues on any of the above topics.

Sincerely,

Karl Cole-Frieman, Bart Mallon, John T. Araneo, Brett Bunnell, Garret Filler, Scott Kitchens, Kevin Leiske, Frank J. Martin, Lilly Palmer, Daniel M. Payne, David Rothschild, Bill Samuels, Tony Wise, and Alex Yastremski

Cole-Frieman & Mallon LLP (CFM) is a leading investment management law firm known for providing top-tier, innovative, and collaborative legal solutions for complex financial services matters. Headquartered in San Francisco, CFM services start-up investment managers, multibillion-dollar funds, and everything in between. The firm provides a full suite of legal services to private funds and their managers across a diverse range of asset classes, including fund formation, regulatory compliance, counterparty documentation (digital and traditional prime brokerage, ISDA, repo, and vendor agreements), employment and compensation matters, and routine business matters.  CFM is particularly well known for its pioneering work with digital asset funds and their managers. The firm’s corporate and intellectual property (IP) practice groups advise founders, management teams, and investors during all stages of a business’s lifecycle including fundraising, M&A, governance, IP, employment, tax, and regulatory compliance for service and product launches. CFM also publishes the prominent Hedge Fund Law Blog. For more information, please add us on LinkedIn, follow us on X, and visit us at colefrieman.com.