Federal prosecutors are recommending that Frank Richard Ahlgren III, the first person ever criminally charged for failing to report gains from the sale of crypto by filing false returns, should be sentenced to 27 months in prison after he admitted underreporting $4 million in BTC proceeds. Prosecutors also argued that Ahlgren should be ordered to pay roughly $1 million in restitution to the government for the lost tax dollars. Ahlgren is scheduled for sentencing on Thursday. He was indicted in February and accused of making false returns for 2017 through 2019 and violating structuring laws.

In an interview with Fox Business, SEC Commissioner Hester Peirce outlined her vision for the SEC’s approach to crypto regulation under President-elect Trump, including stopping the approach of preventing crypto from accessing the services it needs, such as custody, providing clarity, and working with entities involved in crypto to figure out how existing rules apply and where adjustments need to be made. Commissioner Peirce suggested that this collaboration be a public, open process, where all parties involved can participate.

SEC Commissioner Mark Uyeda argued at an American Institute of Public Accountants’ conference that the agency should withdraw Staff Accounting Bulletin (SAB) 121. Uyeda stated that the lack of a proper notice and comment process for SAB 121 was his biggest concern and instead suggested "a more thoughtful process" to address the question of digital assets held in custody, perhaps led by the Financial Accounting Standards Board.

Rep. Mike Carey (R-OH) wrote a letter to Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel, expressing opposition to the IRS’s Broker Rule for centralized digital asset intermediaries. The letter asserts that the rule "would have substantial negative impacts not only on millions of Americans, including many of our constituents, who utilize self-custodial wallets to hold their digital assets, but also on all US taxpayers and the IRS itself." Rep. Carey concludes by arguing that "One need not be a proponent of digital assets to oppose expanding the IRS Broker Rule; to oppose it, one need only be a proponent of fair and efficient tax administration."

The UK Financial Conduct Authority (FCA) issued a warning about memecoin generator platform Pump.fun, stating that the platform is not authorized to operate in the country. The warning notes that the platform "may be providing or promoting financial services or products without our permission." The notice adds that customers dealing with Pump.fun will not have access to consumer protections.

The Czech Republic passed a law that would introduce a three-year tax exemption period for investments in crypto, meaning that residents who hold crypto in their portfolio for at least three years will no longer have to pay taxes on any capital gains generated from their sale. The law is part of a package of crypto-related measures passed by the government. Other reforms would eliminate taxes on annual gross income from crypto transactions not exceeding about $4,300, as well as establish legal protections against arbitrary discrimination by banks.

The Federal Deposit Insurance Corp. (FDIC) directed some financial institutions to pause crypto-related activity while the agency evaluated regulatory concerns with the services, according to letters made public in response to a suit filed on behalf of Coinbase. The "pause letters" show 23 instances of correspondence between the FDIC and regulated institutions about crypto-related activities and services, in response to 2022 guidance that directed banks to dialogue with the regulator about their crypto activities.

The Financial Stability Oversight Council (FSOC) released its 2024 annual report, including a recommendation that Congress pass legislation to create a comprehensive federal prudential framework for stablecoins, highlighting their “potential risk to financial stability because of their vulnerability to runs.” Other recommendations focus on cybersecurity, depository institutions, third-party service providers, commercial real estate, and investment funds. Treasury Secretary Janet Yellen also said in remarks that the FSOC has stepped up efforts to address emerging risks from significant technological changes including digital assets and AI.

The House Republican Steering Committee is scheduled to vote Thursday on the next chair of the House Financial Services Committee. Reps. Andy Barr (R-KY), French Hill (R-AR), Bill Huizenga (R-MI), and Frank Lucas (R-OK) are expected to present their pitches. Steering Committee members will then vote by private ballot on their choice to succeed retiring Chair Patrick McHenry (R-NC). Barr and Hill are thought to be the top contenders.