US District Judge Reed O’Connor overturned the SEC’s rule that expanded the definition of “dealer” to include proprietary trading firms, some hedge funds, and crypto firms, saying the agency overstepped its authority when it adopted the rule. The Crypto Freedom Alliance of Texas and the Blockchain Association filed the lawsuit against the SEC. An SEC spokesperson stated that the agency was reviewing the ruling and "will determine next steps as appropriate."

The CFTC’s Global Markets Advisory Committee voted to advance a recommendation to expand the use of non-cash collateral through the use of distributed ledger technology. The recommendations relate to how registered firms can use DLT for holding and transferring non-cash collateral. These recommendations apply existing policies and procedures to support the tokenized collateral's use in a manner that is consistent with the margin requirements of the CFTC, other US regulators, and derivatives clearing organizations.  

The SEC filed a complaint alleging that California man Eng Taing and his company, Touzi Capital LLC, misrepresented their crypto mining and debt rehabilitation businesses as offering stable investments when raising $115 million. The SEC said in its complaint that Touzi Capital and the numerous businesses it operated "now appear to have collapsed," with about $14 million worth of BTC appearing to be in virtual wallets under Taing's control. The SEC claims that Taing and Touzi falsely marketed the debt rehabilitation business as liquid and similar to high-yield money market funds, while also misleading investors about the costs involved in the crypto mining business.

The CFPB finalized a rule bringing digital payment companies, such as Apple and Google, under the agency’s supervision. The agency stated in a press release that "The rule will help the CFPB to ensure that these companies - specifically those handling more than 50 million transactions per year - follow federal law just like large banks, credit unions, and other financial institutions already supervised by the CFPB." Notably, the CFPB excluded digital assets from the final rule’s scope, citing in part industry comments to the proposed rule. House Financial Services Committee Republicans criticized the rule overall, but voiced support for the exclusion of digital assets.

The SEC announced that Chair Gary Gensler will step down on January 20. His departure will leave the SEC in the hands of an acting chair, who is expected to be either Commissioner Mark Uyeda or Commissioner Hester Peirce. Rep. Mike Flood (R-NE) tweeted about the announcement, stating that Chair Gensler is leaving “a legacy of overreach and chaos.” President-elect Trump has yet to name his pick to succeed Gensler.

Rep. Andy Barr (R-KY) tweeted about the need to pass his proposed Fair Access to Banking Act to “ensure legal crypto companies have access to banking services.” The statement comes in response to Rep. French Hill's (R-AR) line of questioning during a House Financial Services Committee Hearing on prudential regulators, in which Hill criticized the FDIC for "politically target[ing] American businesses and pressur[ing] banks to sever ties with entire industries like crypto."

Senate Agriculture Committee Ranking Member John Boozman (R-AR) said Chair Debbie Stabenow’s (D-MI) last minute push to pass crypto legislation this Congress is “a little bit late,” but said he would look at the bill and talk to industry players. Without support from Boozman, Stabenow will face long odds at advancing her proposal to expand the role of the CFTC in regulating digital assets while Democrats still control the Senate and White House. Lawmakers are in session for just three more weeks before the end of the year.

Reps. French Hill (R-AR) and Andy Barr (R-KY), who are both vying to succeed Patrick McHenry (R-NC) as chair of the House Financial Services Committee, published policy blueprints. Hill targets Operation Choke Point, while Barr highlights his opposition to a CBDC. Both lawmakers have also emphasized the need to foster innovation in the digital space and bring clarity to the industry. Hill currently chairs the Subcommittee on Digital Assets, Financial Technology and Inclusion, and Barr chairs the Subcommittee on Financial Institutions and Monetary Policy.

The Bank for International Settlements (BIS) published a working paper to determine whether decentralized exchanges fulfil their promise of democratizing financial markets by allowing anyone to participate in liquidity provision without intermediaries. The paper found that "liquidity provision on DEXs is concentrated along a small, skilled group of sophisticated (institutional) participants rather than a broad, diverse set of users.... This concentration suggests that, despite the decentralized nature of DEXs, sophisticated participants dominate liquidity provision, limiting the extent to which DEXs democratize market access."