Davis Polk partner Rob Cohen was quoted in Law360 discussing how crypto enforcement could shift in 2025.

The article noted that over the past few years, the SEC has gone from bringing enforcement actions against token issuers to targeting the intermediaries where these assets are bought and sold. Rob said, “We’ll see whether in the new administration there’s a return to the focus on core fundraising activities and how they decide to approach the intermediaries.”

“A significant development in 2025 would be if we start to see appellate court decisions on some of these issues that will provide precedents the district courts within that circuit would have to follow,” he continued.

Discussing potential appellate decisions, Rob explained that the Second Circuit could deliver an opinion that provides more clarity on whether and how securities laws apply to secondary trading of digital assets, but that depends on how broad of an approach the appeals court takes, since the Ripple case itself concerns only the trading of the XRP token and doesn’t require a court to weigh in on the role of intermediaries.

Noting the possibilities, Rob asked, “Does it rule very specifically on the facts of the case, which would be informative but not necessarily all that definitive in how future judges would view different facts? Or would the decision address the issues more broadly, such that you would have a better idea of how courts are going to be required to come out on these issues?”

Rob also mentioned that while the Second Circuit is an important appellate court, it’s not the only one in crypto.

“In particular, we’ve seen an increasing amount of litigation outside of the Second Circuit, in particular in the Fifth Circuit, that probably will continue,” Rob said. “So, a Second Circuit decision would be informative, but we would need to see how other circuits approach the issues also.”

Highlighting that the SEC’s crypto priorities could trend towards rulemaking rather than litigation, Rob said that if new rules are proposed and adopted, that could provide an opportunity for crypto defendants to show how unclear the landscape was when their alleged violations occurred. But he noted, “Whether that would have a direct impact on specific litigations is probably less clear.”

“‘Profound Shift’ Forecast For Crypto Enforcement In 2025,” Law360 (January 1, 2025) (subscription required)

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