This week sees the proposal of a bipartisan tax framework that finally addresses the "phantom income" of staking. Simultaneously, the intellectual property war over AI training data has escalated significantly, with Disney simultaneously licensing their content to OpenAI and opening a new front against Google that could define the boundaries of fair use for a generation.
This week’s docket covers:
A bipartisan proposal for stablecoin and staking tax exemptions
The FDA’s first stablecoin rulemaking under the GENIUS Act
Disney’s "massive scale" copyright demand against Google
Judicial rulings on "robots.txt" protocols and AI scraping
Note that the Block & Order Docket will be taking the holiday off, look for our next Docket on January 4, 2026. Happy holidays and a healthy new year to all our readers (and non-readers alike).
Algorand's Jennie Levin Appears on Block & Order
see video here.
Kyle and Moish talk with Jennie Levin, the Chief Legal and Operating Officer of the Algorand Foundation, about the evolving regulatory climate that is reshaping tokenization, stablecoins, and institutional adoption. Jennie explains how Algorand’s architecture supports real-world assets and global payments, why the foundation is re-embracing the U.S. market, and how builders can navigate uncertainty. She also shares how her former life as a federal prosecutor informs her approach to compliance, risk, and responsible growth in crypto.
Crypto Policy & Legislation
- Lawmakers propose tax exemption for small stablecoin payments. A bipartisan discussion draft of the Digital Asset PARITY Act from Reps. Miller and Horsford aims to eliminate capital gains tax on stablecoin transactions under $200 and allow a five-year tax deferral for staking and mining rewards. [Bloomberg] [Discussion Draft]
- Senate confirms new CFTC and FDIC Chairs. The Senate confirmed Michael Selig to lead the CFTC and Travis Hill to head the FDIC, signaling a shift toward clearer market structure and a potential end to "de-banking" practices for crypto firms. [Cointelegraph]
- FDIC proposes first stablecoin rule under GENIUS Act. The FDIC has initiated rulemaking to establish application procedures for banks seeking to launch stablecoin-issuing subsidiaries. This creates the first federal pathway for integrating dollar-backed tokens into the traditional banking system. [CoinDesk] [FDIC Proposed Rules]
- Corporate Transparency Act ruled constitutional by 11th Circuit. The latest in the never-ending CTA saga, the 11th Circuit reversed a lower court and upheld the CTA, solidifying the mandate for U.S. entities (including DAOs) to disclose beneficial ownership information to FinCEN. [Law360] [Opinion]
Regulatory Enforcement & Compliance
- SEC closes investigation into Aave Protocol. Aave founder Stani Kulechov confirmed the SEC has concluded its investigation into the DeFi protocol without recommending enforcement action, a major win for decentralized finance developers. [X / Stani.eth]
- Broker-dealers must hold exclusive keys for crypto securities. New SEC guidance clarifies that broker-dealers can only satisfy the Customer Protection Rule if they maintain exclusive "physical possession" of private keys, effectively ruling out many third-party custody setups. This raises concerns that the SEC intends to regulate tokenized "real-world assets" (RWAs) through traditional market rails rather than tailoring new rules for decentralized environments. [Cointelegraph]
- Bitcoin mining hosting flagged as securities offering. In a fraud suit filed against VBit in the District of Delaware, the SEC alleged that third-party mining hosting agreements constitute investment contracts, particularly when investors are passive and lack control over the hardware or hashrate. [Cointelegraph] [Complaint]
- FTC orders crypto firm to return $186M following hack. The FTC has entered into a consent order with a crypto firm Illusory Systems (what a name!), holding them liable for poor cybersecurity practices that led to a massive breach, signaling that regulators will treat technical security failures as consumer protection violations. "It's important that companies live up to their security promises to consumers." [Law360] [FTC Press Release] [Proposed Consent Order]
- Jito Foundation returns to US citing "clearer rules". Solana infrastructure provider Jito is moving operations back onshore, citing the improving U.S. regulatory environment and the end of aggressive banking restrictions. [Cointelegraph]
- Coinbase sues states to block prediction market bans. Coinbase has filed suit against regulators in three states (Michigan, Illinois, Connecticut) to prevent them from blocking prediction markets, arguing these derivatives fall under federal CFTC jurisdiction. [Bloomberg]
AI Litigation & Data Rights
- NY Governor Hochul Signs the RAISE Act. Governor Hochul signed legislation to require AI frontier models to create and publish information about their safety protocols, and report incidents to the State within 72 hours of determining that an incident occurred. It also creates an oversight office within the Department of Financial Services that will assess large frontier developers and issue annual reports. [Press Release] [Text of Bill]
- Disney accuses Google of copyright infringement on "massive scale." After agreeing to a licensing deal with OpenAI for Sora, Disney sent a cease-and-desist letter alleging Google used its protected works to train the Gemini AI model, escalating the industry-wide battle over generative AI and fair use. [Variety].
- Court rules "Robots.txt" is not a binding legal gate for web scraping. In Ziff Davis v. OpenAI, a federal court ruled that bypassing a "robots.txt" file does not violate the DMCA, characterizing the protocol as a "keep off the grass" sign rather than a technological barrier. [Eric Goldman] [Order via Edward Lee]
- Class action targets AI note-taking apps over voice data. A new lawsuit alleges that the Fireflies AI productivity app is violating biometric privacy laws by recording and analyzing voice data without proper consent. [Law360]
- Are AI Arbitrators Here? The American Arbitration Association is rolling out an AI arbitrator tool for documents-only disputes, a move expected to reduce costs and standardize outcomes in smaller claims. [Law360]
Why It Matters
- The "Thaw" is Real: The combination of the SEC closing the Aave investigation and Jito’s return to the U.S. indicate that the "offshore" era of crypto may be reversing. We are likely to see a wave of repatriation as regulatory clarity improves, requiring counsel to prepare for reacclimating foreign entities to U.S. corporate and tax standards.
- The Data Scraping "Wild West" is Closing: The Ziff Davis ruling (robots.txt isn't a lock) and the Disney demand letter (you can't scrape our IP) represent two ends of a closing vice. Companies can no longer rely on polite web protocols to protect data; they are increasingly turning to technical barriers or aggressive litigation strategies.
Happy holiday and wishing everyone a healthy new year!
